Consumer Payment Card News

Card Sharks

The Federal Trade Commission’s said yesterday that ‘Operation Loan Shark’ has snagged a total of 37 telemarketing firms engaged in fraudulent advance loan schemes including advance fee credit card scams. Yesterday the Illinois Attorney General joined the federal crackdown by announcing a preliminary injunction against four Chicago area residents who allegedly bilked tens of thousands of consumers nationwide by offering a guaranteed VISA or MasterCard for advance fees ranging from $97.50 to $147.50. Illinois Attorney General Jim Ryan alleged the Chicago defendants collected the advance credit card fees by debiting consumers’ checking accounts and then sending then a ‘Consumer Express’ catalog charge card. Once consumers purchased $400 worth of merchandise from the catalog they would qualify to receive a credit card application. The Chicago group operated under several business names including Premier Card Services, Prime Credit Services, Tower Financial, Colonial Financial and Consumer Express.

Attorney General Jim Ryan joined the Federal Trade Commission in obtaining a preliminary injunction late yesterday against four Chicago area residents for allegedly bilking consumers in an advance fee credit card scam.

The suit was flied Jan. 9 in conjunction with “Operation Loan Shark,” a state and federal crackdown on 37 telemarketing firms and people operating advance fee loan schemes that have allegedly defrauded more than ten thousand consumers nationwide. The preliminary injunction will prevent the defendants from misrepresenting that they can obtain major credit cards for consumers, charging advanced fees for credit or loans and failing to disclose all pertinent facts about their offer.

“We’re alleging that the defendants in our case used mail drops in Illinois to scam consumers all over the country,” Ryan said. “When fraud crosses state lines, combined efforts like this one are essential for successful prosecution.”

The defendants used various aliases and business names. They are Darryl Andre aka Darryl A. Roberts and Darryl Jones; Angela Andre aka Angela Jones; Bryan D. Smith and Anthony Q. Roberts doing business as Creative Concepts, Premier Services, Premier Card Services, Prime Credit Services, Prime Services, Tower Financial Services, Tower Services, Colonial Financial, Colonial Financial Services and Consumer Express.

The defendants allegedly violated the state’s Consumer Fraud and Deceptive Business Practices Act, the Illinois Credit Services Organization Act and FTC Telemarketing Sales Rule when they offered so-called “guaranteed” and “pre- qualified” credit cards to consumers through the mail. Consumers were instructed by postcard to call various 800 numbers to receive a major credit card. Consumers who called were told that a “guaranteed” Visa or MasterCard would be mailed to them for an advance fee of $97.50 or $147.50 to be automatically deducted from their checking accounts. Defendants deducted the fees but instead sent consumers a “Consumer Express” catalog charge card with a letter. The letter instructed consumers that they must purchase $400 worth of merchandise from the catalog to receive only an application for a major credit card. In some cases consumers accounts were debited and yet received nothing.

Violations include

* misrepresenting that consumers would receive a major credit card;

* requesting/receiving payment in advance of obtaining credit for consumers;

* failing to disclose total costs of purchase and restrictions subject to the offer;

* and failing to register the businesses with the state.

Ryan is seeking a permanent injunction, restitution to consumers, costs, a civil penalty of $50,000 and an additional penalty of $50,000 for each violation of the Consumer Fraud Act.

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