Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: Credit Card Interest Rate Reduction Operation Shut Down Following FTC Complaint, (Dec 13, 2012)

By Tobias J. Gillett, J.D., LLM.

Pursuant to an FTC complaint, the federal district court in Phoenix, Arizona has shut down a company that allegedly placed calls to consumers promising lower credit card interest rates that did not materialize (FTC v. National Card Monitor, LLC, FTC File No. 122 3200, Case No. 12-2521-PHX-JHT).

Among other provisions, the court order prohibits the company from making misrepresentations in connection with offering interest rate reduction services, requires the company to cease violating the FTC’s Telemarketing Sales Rule, and freezes assets belonging to the company and its principal.

According to the complaint, National Card Monitor, LLC, also doing business as Nationwide Card Monitor, and its principal, James Eric Cox, had called consumers to offer them purported credit card interest rate reduction services. The company also offered these services through its websites, including nationalcardmonitor.com and nationwidecardmonitor.com.

The calls allegedly claimed that the company could reduce the consumers’ credit card interest rates by acquiring new credit cards for them that would have extremely low rates, sometimes as low as zero percent, to which the consumers could transfer balances maintained on credit cards with higher rates. The company allegedly charged a fee of $499 to $599 for this service, in advance of performing any work for consumers. The company also allegedly claimed to have a money-back guarantee, under which the company would return the fee if it could not obtain a lower interest rate credit card for the consumer.

In its complaint, the FTC asserted that the company would ask consumers to provide sensitive information—such as credit card information, Social Security Number, and date of birth—that the company would sometimes use to take out new cards in the consumers’ names, although not ones with the advertised low interest rates. In other cases, the company would not obtain credit cards for the consumers at all.

Whether or not the company did obtain a credit card for a consumer, the FTC alleges, the company would not honor its money-back guarantee. The FTC also alleges that the company made calls to telephone numbers on the Do Not Call Registry, without paying the required fee to access telephone numbers that are in area codes included in the Registry.

The complaint claimed that the company’s misrepresentations regarding its interest rate reduction services and refund policies violated Section 5(a) of the FTC Act and the FTC’s Telemarketing Sales Rule (TSR), adopted pursuant to the Telemarketing and Consumer Fraud and Abuse Act. In addition, the complaint alleges that the company’s calls to telephone numbers on the Do Not Call Registry, its failure to pay the Registry’s required fees, and its practice of charging a fee in advance of obtaining an extension of credit for consumers violated the TSR.

The FTC’s action against National Card Monitor follows an FTC operation, in cooperation with state law enforcement agencies in Arizona, Arkansas, and Florida, that targeted five credit card interest rate telemarketing schemes. The FTC has also held a summit on illegal robocalls, and currently offers a $50,000 reward for the best functional or technical solution to those calls.

News: ConsumerProtection FederalTradeCommissionNews