List Sellers Settle FTC Charges That They Aided in Illegal Marketing of Advance Fee Credit Products

Three list management companies that allegedly sell or rent lists of consumer information to telemarketers selling advance fee credit products have agreed to settle Federal Trade Commission charges that they violated the agency’s Telemarketing Sales Rule (TSR). The companies are permanently barred from providing lists to telemarketers engaging in illegal business practices and are required to pay nearly $200,000 combined in consumer redress.

Irvine, California-based Guidestar Direct Corp. (d/b/a Carney Direct Marketing); Ft. Lauderdale, Florida-based ListData Computer Services, Inc.; and Asheville, North Carolina-based NeWorld Marketing, LLC, are list management companies that market and sell or rent lists of consumer information to members of the direct marketing industry looking for consumers who would be likely to respond to telemarketing or direct mail offers. The companies operate on behalf of list owners, and typically require prospective list renters to provide them a sample mail piece or telemarketing script, which is forwarded to the list owner for approval.

According to the FTC, scripts sent to the defendants by numerous telemarketers indicated the telemarketers were selling advance fee credit products – sample scripts “guaranteed” consumers credit cards for “one-time fees.” The TSR prohibits telemarketers from charging up-front fees for credit products and from representing that consumers are “guaranteed” or highly likely to obtain credit. The FTC charged that Guidestar, ListData, and NeWorld knew that some of the telemarketers they rented lists to were engaged in illegal practices because of the scripts the telemarketers provided them, and therefore knowingly aided in the unlawful marketing of advance fee credit products.

The settlements bar the companies from selling or renting lists to telemarketers whose operations violate certain provisions of the TSR. Additionally, Guidestar, ListData, and NeWorld have been ordered to pay $25,000, $100,000, and $62,500, respectively, in consumer redress. The proposed order against ListData contains a right to reopen clause that would require the company to pay $316,000 if it is found to have misrepresented its financial situation.

The settlements also contain standard recordkeeping provisions to assist the FTC in monitoring the defendants’ compliance.

The Commission vote to authorize staff to file the complaints and approve the consent agreements was 5-0. The complaint and consent for the Guidestar matter were filed in the U.S. District Court for the Central District of California, Central Division; the ListData matter in the U.S. District Court for the Southern District of Florida; and the NeWorld matter in the U.S. District Court for the Western District of North Carolina on August 11, 2004.

NOTE: A consent order is for settlement purposes only and does not constitute an admission by the defendant of a law violation. A consent order requires approval by the court and has the force of law when signed by the judge.

Copies of the complaints and consent agreements are available from the FTC’s Web site at 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 in English or Spanish (bilingual counselors are available to take complaints), 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 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 File No. 032-3074 – Carney Direct Marketing/Guidestar Direct Corp.)
(FTC File No. 032-3020 – Listdata Computer Services, Inc.)
(FTC File No. 032-3085 – NeWorld Marketing, Inc.)