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FTC Stops Credit Card Rate Reduction Scam

Doyle, Barlow & Mazard PLLC

On February 2, a Canadian telemarketer that falsely claimed it could reduce U.S. consumers’ credit card rates, was stopped by a federal court.

The FTC’s complaint alleges that the defendants have sold credit card interest rate reduction services since December 2005, claiming affiliation with consumers’ credit card companies. The defendants promise to effect credit card rates between 4.75 percent and 9 percent, thus saving consumers at least $2,500, and that if consumers do not save that amount their money will be refunded. The complaint also alleges that the defendants engaged in Caller ID spoofing, causing consumers’ caller identification services to display telephone numbers that do not belong to the defendants, but rather to innocent victims whose telephone numbers are misappropriated.
The defendants sent consumers promotional materials with promises to reduce their interest rates, and a “financial profile form” that the consumers had to mail back for $675 plus $20 for shipping and handling. The form asks consumers to list their current balance, credit limit, interest rate, and suggested minimum payment for each of their credit card and other debts, as well as their social security number and other personal information.

The defendants would initiate three-way telephone calls with consumers and their credit card companies imploring them to lower the consumers’ credit card interest rates. The requests were typically denied and that was the extent of the defendants’ services. Further, the defendants did not honor their policy of giving refunds to consumers who did not receive the promised substantial savings.

The FTC charged the defendants with violating the FTC’s Telemarketing Sales Rule (TSR) by falsely representing that they are affiliated with consumers’ credit card companies, that consumers’ interest rates are likely to be reduced to rates between 4.75 percent and 9 percent, that consumers will save at least $2,500 in credit card interest charges, and that defendants will provide a refund to consumers who do not save at least $2,500 in credit card interest charges. The agency also charged them with violating the TSR by not sending to consumers’ caller identification services the telephone number, the defendant’s name, or the name of the defendant’s telemarketer.

On January 29, 2007, a federal judge issued an ex parte temporary restraining order prohibiting further violations by, and freezing the assets of, defendants Select Personnel Management Inc., based in Ontario, Canada, and doing business as Select Management Solutions, and its director, James Stewart. The Commission approved the filing of the complaint in the U.S. District Court for the Northern District of Illinois by a 5-0 vote.

Camelia Mazard
(202) 589-1834

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