At FTC's Request, Court Stops Deceptive Telemarketing Calls Pitching Credit Card Interest Rate Reduction

At the request of the Federal Trade Commission, a federal judge has put a stop to three companies’ allegedly deceptive telemarketing calls, including robocalls, that promised to reduce consumers’ credit card interest rates; frozen their assets; and appointed a receiver to take control of the business.

According to the FTC’s complaint, over the past two years, the defendants made or authorized calls to consumers nationwide, claiming that they could negotiate with credit card issuers to substantially lower the interest rates on the consumers’ credit cards. They also allegedly delivered prerecorded “robocalls” that consisted of urgent-sounding messages from “Card Services” or “Financial Services,” stating that consumers needed to “press one” to speak to a representative about their credit card interest rates. Many consumers believed the calls were from their credit card issuers.

Consumers who signed up for the defendants’ services were charged from $499 to $1,590 up-front and promised their money back if the callers failed to deliver at least $2,500 in interest rate savings, the FTC alleged. Instead of arranging reduced interest rates, the complaint states, the defendants sent consumers instructions to pay down their credit card debts early, thus saving money on interest. Consumers who complained and demanded refunds allegedly were denied outright, got the run-around, or had a $199 “nonrefundable fee” deducted from their refund.

“The last thing debt-ridden consumers need is to be deluged by illegal robocalls – especially when all the calls are offering is a scam,” said FTC Chairman Jon Leibowitz.

The FTC’s complaint alleged that AMS, Rapid Reduction, PDMI, and their owners violated the FTC Act and the Do Not Call and other provisions of the Telemarketing Sales Rule by:

• deceptively promising consumers they could reduce their credit card interest rates;
• misleading consumers about their refund policies;
• illegally calling numbers on the National Do Not Call Registry;
• failing to honor consumers’ requests not to be called again; and
• making pre-recorded telemarketing calls to consumers without their express written consent. Nearly all such calls have been illegal since September 1, 2009 (see press release at: http://www.ftc.gov/opa/2009/08/robocalls.shtm).

U.S. District Judge Lonny Suko has issued an order appointing two receivers to take over the businesses, and freezing the assets of Advanced Management Services NW LLC, doing business as AMS Financial, Rapid Reduction System’s [sic] LLC, and their principals Ryan Bishop and Michael Rohlf, all of Spokane, Washington, and PDM International, Inc., doing business as Priority Direct Marketing International, Inc. (PDMI) of Bedford, Texas, and its principal William Fithian, of Colleyville, Texas.

The FTC vote approving the complaint was 5-0. It was filed under seal in the U.S. District Court for the Eastern District of Washington on May 10, 2010. The court granted an order temporarily barring the alleged conduct on May 10, 2010. The seal was lifted on May 11, 2010, the day the Commission served the temporary restraining order.

The FTC acknowledges the assistance of Better Business Bureau of Eastern Washington, Northern Idaho, and Montana, and the BBB of Fort Worth, Texas, the U.S. Postal Inspection Service; the Bedford, Texas, Police Department; and the attorneys general of Illinois, Minnesota, North Carolina, North Dakota, Washington, and West Virginia. The FTC also acknowledges that the Internal Revenue Service, the Federal Bureau of Investigation, and the U.S. Secret Service are conducting a separate but parallel criminal investigation and that they executed search warrants on one business and one individual’s home when the FTC served the temporary restraining order.

NOTE: The Commission issues a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The issuance of a complaint is not a finding or ruling that the defendant has violated the law.

Copies of the stipulated final order are available from the FTC’s Web site at http://www.ftc.gov and from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer 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, click: http://www.ftc.gov/ftc/complaint.shtm or call 1-877-382-4357. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1,800 civil and criminal law enforcement agencies in the U.S. and abroad. For free information on a variety of consumer topics, click http://ftc.gov/bcp/consumer.shtm.

(FTC File No. 092-3187; Civ. No. CV-10-0148-LRS)
(AMS.Final.wpd)