Canadian Telemarketer Offering Credit Caed "Protection" Services Deceived Consumers, FTC Says

A federal district court in Atlanta has temporarily halted what the Federal Trade Commission has alleged to be a deceptive telemarketing scheme offering credit card protection services to consumers across the country. The FTC charged that telemarketers for the defendant, The Tracker Corporation of America, which does business as "Consumer Protection Services," falsely represent to consumers that they are calling from or on behalf of the consumers’ credit card issuer for the purpose of updating the company’s records. During the sales pitch consumers are "reminded" that thieves are breaking into computers, stealing consumers’ credit card information, and using that information to make unauthorized charges. Tracker’s telemarketers claim that consumers will not discover these unauthorized charges until they get their credit card statement at the end of the month, and by then it will be too late to have the unauthorized charges removed. Tracker’s telemarketers falsely state that consumers only have 48 hours to report the loss, theft, or unauthorized use of their credit card to their credit card issuer or they could be held liable for the unauthorized charges. According to the FTC’s complaint, the telemarketers would then offer consumers, for a fee of $189, protection of up to $10,000 to cover such charges.

The FTC charged that such representations violate the FTC Act and the Telemarketing Sales Rule. In fact, federal law states that consumers cannot be held liable for more than $50 of unauthorized charges on their credit cards.

In addition to the temporary restraining order, the court has ordered an asset freeze to preserve funds for consumer redress. On September 15, 1997, Tracker agreed to a stipulated preliminary injunction which prohibits its telemarketers from making the misrepresentations alleged in the Commission’s complaint and places other requirements on the company pending final resolution of this matter. The stipulated preliminary injunction was entered by the Court that same day.

The Tracker Corporation of America is a Delaware corporation with offices in Smyrna, Georgia, and New York City. Tracker also operates in Toronto, Canada through a wholly-owned Canadian subsidiary. Tracker contracts with independent telemarketing companies located throughout the U.S. and Canada to market its credit card protection program.

Contrary to what Tracker’s telemarketers tell consumers, according to the FTC’s complaint detailing the allegations, the defendant is not affiliated with, or calling from or on behalf of any consumers’ credit card issuer. Further, under the Truth in Lending Act and its implementing Regulation Z, consumers are not required to report the loss, theft or unauthorized use of their credit card within 48 hours, and consumers cannot be held liable for more than $50 for unauthorized charges, and often their liability is zero. For instance, if the loss of a credit card is reported before any unauthorized use, the cardholder cannot be held liable for any amount.

In addition, the FTC’s complaint alleges that consumers have suffered substantial monetary loss as a result of the defendant’s unlawful practices and has asked the court to order a permanent injunction prohibiting the defendants from violating the FTC Act and the Telemarketing Sales Rule in the future. The FTC also asked the court to order the defendants to pay consumer redress.

The FTC filed its complaint under seal in the U.S. District Court for the Northern District of Georgia, Atlanta Division, on September 11, 1997. The seal was lifted Sept. 16. The Commission vote to file the complaint was 4-0. The Office of the Ohio Attorney General assisted the FTC with this investigation.

NOTE: The Commission files 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 complaint is not a finding or ruling that the defendant has actually violated the law. The case will be decided by the court.

The FTC has a number of consumer brochures that offer consumers tips on spotting telemarketing scams and how to avoid them, as well as information on choosing and using credit cards.

Copies of the complaint, as well as the consumer brochures, are available from the FTC’s Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326- 2710. FTC news releases, consumer information, and other materials also are available on the Internet at the FTC’s World Wide Web site at: http://www.ftc.gov

(Civil Action No.: 1:97cv2654-JEC)
(FTC Matter No. 972 3256)