FTC predicts end to Miss Cleo calls after settlement

WASHINGTON -- Trading fortunes cost a fortune as the companies behind Miss Cleo's psychic hot line agreed Thursday to forgive $500 million in customer bills to settle a federal lawsuit alleging they fleeced callers hoping to glimpse the future.

Access Resource Services Inc. and Psychic Readers Network Inc. also agreed to stop selling their alleged soothsaying services over the phone and pay the government a $5 million fine, the Federal Trade Commission said.

The two Fort Lauderdale, Fla.-based companies -- owned by Steven Feder and Peter Stolz -- promoted a national network of "psychic readers" on television and the Internet.

A woman identified as a Jamaican mystic named "Miss Cleo" offered supernatural insights into love and money.

Miss Cleo's real name is Youree Dell Harris. During a deposition in June, Harris repeatedly invoked her Fifth Amendment right against self-incrimination, refusing to discuss a birth certificate showing she was born in Los Angeles to American parents.

Howard Beales, director of the FTC's consumer protection bureau, said there was no truth in Miss Cleo's prognostications.

"I'm no psychic but I can foresee this: If you make deceptive claims, there is an FTC action in your future," he said in announcing the settlement.

The FTC accused the companies of misdeeds including false promises of free psychic readings, tricky billing tactics to squeeze money out of callers and harassing telemarketing calls.

The companies did not admit breaking any law but agreed to stop the phone service and forgive about $500 million in outstanding charges. They also must return all uncashed checks to customers.

Beales said during three years of operation the service charged people about $1 billion and collected half of it.

Sean Moynihan, an attorney for the companies, said the businesses did nothing illegal and were not given enough opportunity by the FTC to explain their practices before the lawsuit was filed.