A Peek Inside One Telemarketing Firm Ensnared in FTC Lawsuit

After just four days as a telemarketer at Transcontinental Warranty, Mark Israel quit. He couldn't take all the dishonesty and the "screaming and yelling" from irate consumers.

A declaration from Israel, of Boca Raton, Fla., is a key component in a Federal Trade Commission civil lawsuit against the Florida company, which is accused of using illegal, prerecorded calls — or robocalls — and blatant misrepresentations while hawking bogus car warranties.

After finding an advertisement for the part-time position on Careerbuilder.com, Israel was hired on the spot and was among 30 other operators selling what were actually extended service contracts that cost up to $3,000. He knew something was wrong right away.

"After listening to several telephone calls, I learned that Transcontinental was engaged in a practice called 'robo-calling,'" Israel told investigators. "That is, Transcontinental somehow used automatic dialers to call consumers and play a pre-recorded message that allowed consumers to 'press 1' to talk to a live agent, or 'press 2' to be removed from the company's calling list."

The name of the game at Transcontinental — one of three firms that received a preliminary injunction last week and saw its assets frozen in connection to two related FTC cases — was "Hang Up. Next."

"Not only was this motto written on signs throughout Transcontinental's business premises, but I heard supervisors repeatedly make this statement as well," Israel said. "Essentially, this meant that if the consumer did not readily go along with the scripted telemarketing pitch, I should immediately hang up on the consumer."

The sales campaign was "rife with misrepresentations and outright lies," according to court documents, including the assertion that Transcontinental was somehow affiliated with car manufacturers and the fabricated sense of urgency that the offer would expire soon.

The FTC alleges the random dialing also reached numbers registered on Do Not Call lists and that Transcontinental used "spoofing" techniques to mask the source of the calls.

"When someone is spoofing a phone number, of course, it's hard to find out who they really are," FTC Chairman Jon Leibowitz told FOXNews.com. "Sometimes an employee or a past employee who's upset with the scheme or the scam that's going on will report to a law enforcement agency or the FTC what's going on and then we'll find out who they are. But it's very, very difficult."

Click here: Behind a Massive Robocall Scam, Four Human Faces

Israel, who typically fielded about 100 calls per hour, said supervisors told him to never divulge the company's name.

"In fact, my trainer told me that telemarketers could be fired for giving out Transcontinental's name," Israel told investigators. "Instead, I was told to make up a generic sounding name like 'Warranty Services,' or, in keeping with the company's motto, to simply hang up."

Israel estimated that 99 out of 100 consumers he spoke with complained that Transcontinental continued calling despite requests to be removed from its calling list. Still, some telemarketers sold 14 "warranties" per week. Israel himself sold three in four days.

Just prior to leaving the company, Israel had a quick meeting with owner Christopher Cowart.

"I … asked him what was the key to selling the most warranties," Israel said. "He said that the telemarketing script had been proven to work, so I should stick with it."

Cowart, meanwhile, disputed Israel's claim regarding the company's motto.

"I believe he's mistaken," Cowart told FOXNews.com. "We're completely transparent and have nothing to hide."

Cowart, who said he's cooperating with investigators, said the allegations of illegal sales and tactics are inaccurate.

But some consumers are still getting calls, despite the legal action

Bernard Barczak, of Voorhees, N.J., said he received up to three pitches per day beginning about two months ago. In the dozens of calls, he always pushed '2' to speak to a so-called warranty specialist. Barczak said he frustrated a telemarketer when he asked for a number to return the call later. Instead, he was given digits for a pornography hotline.

"The man was rude, he knew I had him and he got even," Barczak told FOXNews.com. "I've always been really fearful of telemarketers. If I can't see it, I'm really leery."

Better Business Bureau spokeswoman Alison Southwick said the agency has received more than 300,000 inquiries from consumers related to extended auto warranties in the past two years. And since most people don't bother to complain, that's likely the "tip of the iceberg," she said.

And the telemarketers have moved onto new schemes since the FTC's suit, including robocalls pertaining to lower mortgage and credit card interest rates. Southwick said the entire industry has "some clean up to do" and that some firms are targeting areas where consumers need the most help right now due to the struggling economy.

"It doesn't matter where you live, you've probably gotten one of these calls. I personally received a call at my office at the Better Business Bureau, which is ridiculous to think about. They called and said my auto warranty was about to expire; I don't even own a car."