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Fraudulent Offers

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More firms have been shutdown by a federal court for allegedly making fraudulent credit card offers. Today the Federal Trade Commission and the Illinois Attorney General charged a group of Illinois-based companies with operating a massive scheme whereby consumers were offered a credit card for a $219.95 fee and then never received a card. Earlier this month, the FTC shutdown a group operating out of New Jersey for deceptive telemarketing of advance fee VISA or MasterCard credit cards. A U. S. District Court, at the request of the Federal Trade Commission, also froze the assets of and closed down a marketer of gold catalog cards in early November.
In the Illinois action announced today, the FTC and the State of Illinois filed charges against 1st Financial Solutions, Inc., American Benefits Club, Inc., Rockwell Holdings, Inc., and John F. Boone, doing business under their respective names and various fictitious names, including: “1st Freedom,” “1st Choice Financial Solutions,” and “Card Services.” 1st Financial Solutions and American Benefits Club are both headquartered in Park Ridge, Illinois. Rockwell Holdings is based in Schaumburg, Illinois, and John F. Boone is an officer of Rockwell Holdings.The complaint alleges the defendants used a network of telemarketers nationwide to offer VISA and MasterCard credit cards to consumers for fees ranging from $99.95 to $219.95. The defendants never provided credit cards or any other extension of credit, according to the complaint. Most of the time, consumers received nothing for their money. Some consumers received either promotional literature touting a membership benefits program, or a stored value card, that could only be used if the consumer deposited a sufficient amount of money into an account to cover the purchases.

In New Jersey, the FTC had filed charges against Financial Services of North America, Inc. The company agreed to pay $239,793 for consumer redress as part of the settlement. The defendants claimed that for a $99 fee, consumers with credit problems were guaranteed to obtain major credit cards. Instead of receiving the promised credit cards, however, consumers received a membership in the “Diamond Club,” a merchandise-purchasing club. Consumers also received a credit card application to a South Dakota bank issuing sub-prime credit cards, which required additional application fees. The FTC says the defendants debited many consumers’ bank accounts without their authorization, and, in other instances, they debited consumers’ accounts in amounts exceeding the amounts authorized by the consumers.

The FTC had also filed charges against Salyon, Inc., d/b/a First Liberty Financial, Salyon National Credit, Shop Salyon, Quicklinks.com. The company targeted consumers with negative credit histories, using pitches like, “You can re-establish your good credit!” and “Account Status: APPROVED GOLD CARD.” For fees ranging from $49 to $64, the defendants offered “pre-approved” credit cards with $15,000 credit limits, and zero percent interest rates for the first year. Instead, the merchant card they provided only allowed users to purchase items from the defendants’ Web sites or catalogs. They also claimed that consumers who maintained a favorable payment record would be issued a MasterCard with a lifetime zero percentage rate.

For more information visit http://www.ftc.gov.

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