The Future Looks Bright

Since launching Miss Cleo's network in 1999, Feder and Stolz come under consistent fire from customers who say they've been jilted by the psychic duo. Currently eight states have taken some form of action against the network for problems ranging from deceptive advertising practices to billing errors.

"Don't let sex be the thing that brings you back to a familiar place," Miss Cleo advises one caller.

Susan Grant, director of the National Fraud Information Center, says that most of the problems facing the Miss Cleo network could be solved by clearing up the advertising. Grant says the blurred line between the free portion of the call and the paid portion is the main culprit.

"Companies that provide services through 900 numbers have an obligation to make it clear what you're going to be charged and on what basis," Grant said. "But cases like the Miss Cleo case illustrate that a lot of times that information isn't presented in a straightforward and understandable way."

"Usually people think that they're getting a free reading to sample the service," Grant added. "But they end up being hit with charges they couldn't see even with a crystal ball."

The first suit filed against Feder's companies was brought in 1999 by the state of North Carolina. Mike Easley, the state's attorney general, alleged that customers were being billed for time advertised as free — and if they did get free time, much of it was spent on hold or on answering logistic details.

ARS, named as a defendant in the suit, agreed to settled the case for nearly $60,000.

That suit brought up another complaint as well, that some residents receive collection notices for phone numbers that weren't even theirs.

Moynihan says that billing problems such as these generate 90 percent of the complaints against the network or ARS (Access Resource Services, Inc.), which handles collections for the network.

According to FTC rules, a long distance company is obligated to dismiss 900 calls that customers have contested. ARS is then stuck with the bill. To recoup its losses, the company aggressively pursues payment by using the phone number from which the call was initially dialed to track down and bill the caller.

As a result, Moynihan admits, people sometimes get bills and collection notices for calls they didn't make. "It might have been your gardener, it might have been your maid, or it might have been your babysitter — but if it appears on your phone bill, the call was placed," he said.

The lawyer argues that a business handling so many calls is bound to make a few mistakes. "But you're not talking about thousands of complaints," he says. "You're talking about 50 or 60."

Still, some of the billing mixups have been particularly egregious. Some families have reported receiving ominous collection notices for relatives that had long ago passed away, for example.

Mixups of this sort have become rallying points for detractors of Feder and Stolz's aggressive practices.

With the North Carolina suit settled, the network must now face many of the same allegations in suits pending in Illinois, Pennsylvania, Wisconsin and Missouri.

In Missouri, Attorney General Jay Nixon has already won one victory against ARS.

Shortly after Nixon filed suit in July 2001, alleging that ARS called residents that should have been protected by the state's no-call rule, the company agreed to pay $75,000 in fines.

"Miss Cleo should have seen this coming," Nixon said in a press release brimming with appropriate puns. "It doesn't take a crystal ball to realize that ripping off consumers isn't without consequences. I predict the courts will see that Miss Cleo pays for a serious lack of foresight."

Saying Nixon "blindsided" his clients, Moynihan claims that the company called only its former customers, which it was allowed to do under Missouri state law. "All the complaints were just absolutely wrong," the attorney said. "But we settled to stop the bleeding from all the negative press."

The publicity over the Missouri victory was so damaging, in fact, that Feder and Stolz put out a special Miss Cleo commercial to address it. Soon after the settlement, the screen shaman claimed in a new series of ads: "For years, people have been persecuted for their beliefs," adding that she wasn't about to let "them" hold her back from helping people.

While Nixon may have grabbed the biggest headlines with his victory, it was an Arkansas suit that dealt Feder and Stolz their first financial knockdown. In November 2001, the state forced ARS to forgo $3.2 million in charges for violating the no-call rule as well as for the recurrent allegations of misleading advertising and wrongful billing practices.

The New York Consumer Protection Board, too, has used its no-call rule, which was passed in April 2001, to seek $224,000, or a maximum of $2,000 for each of 112 no-call violations, from ARS in an Oct. 31, 2001, filing. But authorities there have added yet another group to those they wish to protect — the psychics themselves.

"We want to warn people thinking about joining this enterprise from a stay-at-home workplace that they should take some more time to think about this," said Jon Sorenson, spokesperson for New York's consumer protection board. "They're just like the customers at first because neither of them know what they're getting into."

Attorneys in the network's home state of Florida haven't brought suit against PRN or ARS — but they have succeeded in getting the company to change its advertisements so that they don't seem to offer an entire reading during the three-minute trial period. The company also agreed to stop implying that every caller would get through to Miss Cleo, and has since changed her tagline from "Call me now..." to "Call now for your free readin'."

These changes may have been largely cosmetic, but a third agreement signed in late 2001 binds the company to follow in Florida any agreement it makes in another state.

The biggest suit threatening Feder and Stolz right now is a civil suit filed by the author of a popular book on tarot card readings. Nancy Garen, who wrote 1989's "Tarot Made Easy", claims Feder and Stolz used material verbatim from her work on their Web site and told their psychic readers to use it as a guide during calls. She is seeking $250 million.

Garen and her lawyer, Larry McFarland, claim to have found a total of 154 sections of "Tarot Made Easy" on the site in an online tarot card reading section offered free to customers of the network. "Ninety percent of those cards had text copied from 'Tarot Made Easy,'" McFarland said. "It just floored us."

While Moynihan did not deny that material from Garen's book might have been used by the company, the lawyer says the suit won't stand up in court. "Whatever it was, it was certainly not something that was directed by the principals of the company," he said.

McFarland says the ongoing discovery period of the lawsuit has helped him develop a case for the use of the book as a script.

In one e-mail the lawyer obtained (click here to view), Feder urged his psychics to sign an affidavit stating that he never requested them to use Garen's book.

"Could anyone imagine giving a spiritual or psychic reading by using the descriptions of a tarot card read verbatim as a reading?" Feder asked. "I'm tired of us being accused of being frauds and fakes when we make a difference in thousands of people's lives every day."

A followup e-mail from the group manager stated that unless psychics filled out the form, they wouldn't be allowed to field calls.

"I am sorry to be a pain but I sent you an affidavit a few days ago and you have not sent it back yet. It needs to be signed and returned no later than 10-19-01 which is tomorrow or you will not be able to work," the e-mail states. "Please send it in if you want to keep working. It is a requirement from the main company."

But perhaps the most surprising development in Garen's case was when Harris —Miss Cleo herself—actually contacted one of the author's lawyers—to offer an apology.

"Ms. Harris stated, 'Please tell Ms. Garen I am so, so sorry,'" Sebastian Gibson, another lawyer for Garen said in his deposition of his 30-minute conversation with Harris. "It's horrendous, it's disgusting, especially when they take that route. There was no need for them to do anything like that. I told them long ago, 'Why are you doing this?'" Harris said, according to Gibson.

It might not matter how involved Miss Cleo is with any of the activities alleged in the suits. In the end, her popularity could prove to be her downfall.

"People don't think about PRN or ARS," said the Florida psychic who spoke to Courttv.com. "They think about Miss Cleo. And if her reputation gets dangerous, they'll just get rid of her."

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