Consumer Payment Card News

Card Protection Scam Settles

Florida-based GEP,INC. and Bank Card Security Center, Inc., along with their owner Steven Zwicker, have agreed to pay a $44,000 civil penalty in their settlement with the Federal Trade Commission. In a separate settlement, Executive Industries, Ltd., and its owner Tony Cosantino, have agreed to $22,000 in civil penalties.
Both sets of defendants were charged by the FTC with selling a program that they claimed protected consumers from losses associated with lost or stolen credit cards. The companies misrepresented the extent of cardholders liability for the unauthorized use of a credit card, often claiming that consumers could be liable for thousands of dollars in unauthorized charges, and that they had only 48 hours to report the loss or unauthorized use. In point of fact, federal law limits a consumers liability for unauthorized charges to $50 per credit card, and there is no specified time limit for reporting loss, theft, or unauthorized use. The defendants also falsely claimed affiliation with consumers credit card issuers.

The FTC suit further alleged that the defendants, during their sales pitch, also violated the FTC Act and the Telemarketing Sales Rule (TSR), by making false and misleading statements to induce consumers to purchase their services.

In both settlements, in addition to paying civil penalties, the defendants were prohibited from making any misrepresentations of fact material to a consumers purchasing decision. In separate proposed settlements, the defendants would also be prohibited from future violations of the TSR, misrepresenting affiliation with any consumer credit card issuer, misrepresenting any consumer legal rights or obligations, misrepresenting any other material fact to consumers, and disclosing information about consumers who purchased credit card protection from them. The FTC will monitor the defendants compliance in the future.

GEP and Executive Industries sold the credit card protection program through telemarketing rooms on behalf of Tracker Corporation of America. Tracker, a Canadian corporation, and its president, Bruce Lewis, have also recently settled an FTC suit, and are permanently barred from selling credit card protection.

Both suits are subject to court approval.

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