Consumer Payment Card News

Processing Fee Scam

The Federal Trade Commission has settled with two businesses who allegedly told consumers that they could get an unsecured VISA or MasterCard credit card, regardless of their past credit history, for a one-time upfront processing fee. After paying the fee, the consumers didnt receive the promised credit cards.
Brent Ballard, doing business as SOC Enterprises, and Jeff Russell, doing business as Jeff Russell & Associates, have agreed to settle FTC charges over their roles as third party telemarketers for SureCheK Systems, Inc., doing business as Consumer Credit Corporation (CCC) and Consumer Credit Development Corp.

The defendants targeted consumers with credit problems, persuading them to give their checking account information, and in some instances, debited their checking accounts without the consumers authorization. After paying the upfront fee, many consumers received only application forms allowing them to apply for credit cards, with additional fees, through banks that issue cards based on the banks own credit criteria.

As part of an enforcement initiative against advance fee credit card fraud known as Peach Sweep, the FTC and the Arkansas Attorney General filed complaints in federal district court against SureCheK Systems in July, 1997. The FTC alleged that the defendants violated provisions of the Telemarketing Sales Rule that prohibit telemarketers, who claim they can arrange credit for consumers, from asking consumers to pay any money before they receive the loan or credit.

The settlements with Ballard and Russell, which are subject to court approval:

–prohibit them from making any false or misleading statements about, or failing to disclose material facts relating to, the cost or conditions of receiving any extension of credit;

–bar them from making misleading statements about or failing to disclose material facts about any product or service they sell;

–prohibit them from misrepresenting that they will provide or arrange for consumers to receive credit cards;

–prohibit them from misrepresenting that consumers applications for credit cards have been approved; and

–prohibit them from misrepresenting that consumers will receive credit cards regardless of their creditworthiness.

In addition, the settlement prohibits Ballard from supplying information about the people he scammed – such as the name, address, telephone number, credit card or bank account number – to anyone other than law enforcement authorities.

The settlements also contain other recordkeeping provisions designed to assist the FTC in monitoring compliance.

Copies of the settlements are available from the FTCs Web site at www.ftc.gov; from the FTCs Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; or by calling 202-FTC-HELP (202-382-4357); TDD for the hearing impaired is 202-326-2502.

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