Operators of Credit Card Rate Reduction Scam Are Banned From Telemarketing

At the request of the Federal Trade Commission, a U.S. district court judge has imposed a telemarketing ban on a Canadian operation that targeted U.S. consumers with false claims that it could reduce their credit card interest rates.

The court entered a permanent injunction that puts the defendants out of the telemarketing business and also bars them from misrepresenting that they are affiliated with consumers’ credit card companies, or that they can get consumers’ credit card interest rates reduced. The court also ordered the defendants to pay more than $7.8 million.

According to the FTC’s complaint, the telemarketing operation defrauded about 12,000 consumers out of more than $7.8 million between 2005 and 2007 by falsely claiming that it could substantially reduce consumers’ existing credit card interest rates and save them thousands of dollars in interest and finance charges. The defendants stated or implied--falsely--that they were affiliated with consumers’ credit card companies. For $675 plus $20 for shipping and handling, the complaint alleges, the defendants sent consumers promotional materials with promises to substantially reduce their interest rates, and a “financial profile form” for them to complete and mail back. The complaint alleged that the defendants promised to reduce the interest charged on credit cards to rates between 4.75 percent and 9 percent, save consumers at least $2,500, and refund the cost of their services to consumers who did not save at least that much money.

In fact, according to the FTC, the operators of the scam did little more than add their own fee to consumers’ credit card balances. The extent of the defendants’ rate-reduction services consisted of setting up three-way telephone calls with consumers and their credit card companies, and asking that the companies lower the interest rates. Those requests typically were denied.

The FTC charged that the defendants’ misrepresentations violated the FTC Act and the Telemarketing Sales Rule (TSR). The agency also charged the defendants with violating the TSR by “spoofing” telephone numbers so that their calls appeared on consumers’ caller identification services as coming from another number, and by failing to provide the names of the defendants or their telemarketer on caller identification services.

Judge Charles R. Norgle, Sr., of the U.S. District Court for the Northern District of Illinois, previously had issued preliminary injunctions against, and froze the assets of, defendants Select Personnel Management Inc., based in Ontario, doing business as Select Management Solutions Canada; 1402473 Ontario Limited; 1489841 Ontario Limited; 2105635 Ontario Limited; Special T Services Group Inc.; United Registration Services Inc., as well as individual defendants James Stewart, Luigi Paulozza, and Philip J. Richards.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,500 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s Web site provides free information on a variety of consumer topics.