Dallas-Based Business Settles FTC Charges of Offering Fraudulent Advance-Fee Credit Cards

Brent Chivers, doing business as Credit Card Services and Destyni Enterprises, agreed to pay $85,000 in consumer redress as part of a settlement with the Federal Trade Commission. The FTC alleged that the defendant violated the FTC Act and the Telemarketing Sales Rule (TSR) by offering consumers major credit cards, such as a MasterCard or Visa, for a one-time up-front fee. In addition to paying redress, the settlement prohibits the defendants from misrepresenting any fact material to a consumer's decision to purchase any good or service marketed by the defendant.

In September 2002, the FTC announced "Operation No-Credit" - a sweep targeting fraudulent telemarketing schemes that prey on consumers seeking personal credit. "Operation No-Credit" highlighted the efforts of the FTC and other law enforcement entities to halt financial frauds occurring throughout the United States. According to the FTC, through a telephone boiler room located in Dallas, Texas, the defendant telemarketed advance fee credit cards to consumers throughout the nation. The defendants allegedly told consumers that for a $79 up-front fee, they would receive a Visa or MasterCard credit card. In many instances, the FTC alleged, consumers received nothing from the company after they paid the fee, or they received bank credit card applications that included additional fees or only offered secured credit cards. When consumers requested a refund, the defendant either ignored the request or informed the consumers that they must meet specific criteria that they did not previously disclose.

The FTC's complaint alleged that the defendant violated the FTC Act and the TSR by charging consumers an advance fee for credit cards and falsely representing that consumers would receive a card after they paid the advance fee.

The settlement announced today requires Chivers to pay $85,000 in consumer redress and contains a suspended judgment of $250,000, which will be reinstated if it is found that Chivers lied on his financial statement. The settlement prohibits him from engaging in misrepresentations in connection with the advertising, promotion or sale of services relating to loans, credit cards or other extensions of credit. The settlement also prohibits Chivers from misrepresenting that consumers who pay a required fee will receive a loan, credit card, or other extension of credit, and that he has connections with sources that will provide consumers with credit cards, loans, or other extensions of credit. In addition, the settlement prohibits Chivers from misrepresenting any fact material to a consumer's decision to purchase any good or service marketed by the defendant.

The settlement further prohibits future violations of the TSR. Specifically, the settlement prohibits the defendant from stating that consumers will obtain an extension of credit for a fee, and charging consumers an advance fee to obtain a credit card when the defendant has guaranteed or represented a high likelihood of success in obtaining the card. Further, the settlement prohibits Chivers from selling customer lists. Finally, the settlement contains various recordkeeping requirements to assist the FTC in monitoring the defendant's compliance.

The Commission vote to authorize staff to file the stipulated final judgment and order against Brent Chivers was 5-0. The FTC filed the stipulated final judgment in the U.S. District Court for the Northern District of Texas, Dallas Division. The Judge signed it on June 10, 2003.

NOTE: This stipulated final judgment and order is for settlement purposes only and does not constitute an admission by the defendant of a law violation. A stipulated final judgment and order have the force of law when signed by the judge.

Copies of the stipulated final judgment and order and other related documents in this case are available from the FTC's Web site at http://www.ftc.gov and also 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 in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint, or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1 877-382-4357), or use the complaint form at http://www.ftc.gov. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

(FTC Matter No. X020101)
(Civil Action No. 3-02CV1727-G)