FTC Halts Bogus Credit Card Business

A business that claimed it could obtain unsecured credit cards -- even for consumers with past credit problems -- for up-front "processing fees" of up to $129 has agreed to settle Federal Trade Commission charges that in almost all cases they failed to provide the cards and, in others, they failed to disclose additional processing and annual fees, in violation of federal law. SureCheK Systems, doing business as Consumer Credit Corporation, used "mercenary" third-party telemarketers in their marketing effort. The telemarketers called consumers across the country guaranteeing that regardless of the consumers' past credit history, they could secure Visa or MasterCards with no security deposit. Six telemarketers working for SureCheK also were charged with violating federal law, including the Telemarketing Sales Rule.

The settlement with SureCheK would bar false and misleading statements about securing credit cards, require disclosure of material facts relating to the cost or conditions for receiving extensions of credit, bar the defendants from selling their victim list and provide $11,000 in consumer redress. One of the independent telemarketers, Marc Hart, also has agreed to settle the FTC charges.

In five separate federal complaints, the FTC has asked a U.S. District Court to bar the deceptive acts and order consumer redress for five other telemarketers: George B. Schewe d/b/a GBS Group; Brent Ballard d/b/a SOC Enterprises; Jarrell Andre Goolsby d/b/a Concepts & Ideas; Arshad Wallace d/b/a Comtel Marketing and Management Systems; and Bill Owen d/b/a Source One, Inc. The FTC alleges the telemarketers violated provisions of the Telemarketing Sales Rule that bar telemarketers who claim they can arrange credit for consumers from asking consumers to pay any money before they receive the loan or credit. In January 1998, four other telemarketers settled FTC charges in conjuction with the SureCheK case.

The defendants and their businesses are based in and around Atlanta, Georgia.

In July 1997, the FTC and the Arkansas Attorney General alleged that SureCheK Systems, doing business as Consumer Credit Corp. and Consumer Credit Development Corp., and their principals, telemarketed unsecured major credit cards for "processing" fees ranging from $79.95 to $129.95. The defendants claimed that consumers with past credit problems would be approved for a card with no security deposit. The defendants persuaded consumers to divulge their checking account information, and, in some instances, debited their checking accounts without the consumer's authorization. Consumers received only application forms allowing them to apply for credit cards, with additional fees, through banks that issue cards based on the banks' own credit criteria. The FTC charged that the practices violated federal laws, including the Telemarketing Sales Rule. At the request of the FTC and the Arkansas Attorney General, the

U.S. District Court for the Northern District of Georgia issued a Temporary Restraining Order and froze defendants' assets, pending trial. The agreement announced today settles the charges.

The settlements bar the Atlanta, Georgia-based companies and Douglas S. Derickson and Steve Lovern, their principals, from violating the Telemarketing Sales Rule. They also bar the defendants from making any false or misleading statements to consumers or failing to disclose material facts relating to the cost or conditions of receiving any extension of credit. Specifically, the settlement would bar misrepresentations that:

• they will provide or arrange for consumers to receive credit cards;

• consumers' applications for credit cards are approved; or

• consumers will receive credit cards regardless of their creditworthiness.

In addition, the agreements prohibit them from supplying information about the people they scammed -- such as the name, address, telephone number, credit card or bank account number -- to anyone other than law enforcement authorities. The agreement with Derickson requires him to pay $11,000 in consumer redress. The settlements also contain record keeping provisions to allow the Commission to monitor compliance.

The settlement with Marc Hart, doing business as G.M. & Associates, will bar him from making any false or misleading statements about arranging credit or about the cost or conditions of receiving any extension of credit. It also prohibits violations of the Telemarketing Sales Rule. Finally, Hart and his company also are barred from providing identifying information about consumers to anyone other than law enforcement authorities.

In the five complaints against the other telemarketers who assisted SureCheK, the FTC alleges that consumers across the United States have suffered substantial monetary loss as a result of the fraudulent telemarketing. The FTC has asked that the court permanently enjoin the illegal acts and order consumer redress.

The Commission vote to authorize the filing of the stipulated final judgment in the SureCheK matter was 4-0, with Commissioner Mary L.Azcuenaga not participating. The Commission votes to authorize the filing of the stipulated final judgment with Mark Hart and issue the complaints against George B. Schewe, Brent Ballard, Jarrell Andre Goolsby, Arshad Wallace and Bill Owen and their companies were 5-0.

NOTE: Stipulated final judgments are for settlement purposes only and do not constitute an admission by the defendant of a law violation. Consent judgments have the force of law when signed by the judge.

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.

Copies of the complaints, consents and stipulated final judgments are available from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-FTC-HELP (202-382-4357); TDD 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 File No. X97 0082)
(Civil Action Nos: SureCheK-1-97-CV-2015 (JTC))
(Other Civil Action Nos. unavailable at press time)