Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: Credit card interest rate reduction telemarketers settle FTC charges, (Nov 22, 2013)

By Tobias J. Gillett, J.D., LL.M.

The final six of ten defendants charged by the FTC with making millions of illegal pre-recorded robocalls claiming to be from “Rachel” and “Cardholder Services” and pitching credit card interest rate reduction services have agreed to settle the FTC action against them, the agency announced today (FTC v. ELH Consulting, LLC, FTC File No. 122 3195, Case No. CV-12-2246-PHX-FJM).

According to the FTC’s complaint, the defendants would place prerecorded calls to consumers claiming to be from “Cardholder Services” and offering credit card interest rate reduction services that could obtain extremely low rates for consumers. The defendants allegedly claimed that their services would permit the consumers to pay off their debts much faster, and would quickly offset the defendants’ typically $500 to $999 fees. However, the defendants’ services generally failed to achieve the claimed interest rate reductions, according to the FTC, and the defendants would typically refuse to provide a refund in those circumstances.

The complaint asserted that the defendants violated Section 5 of the FTC Act and the FTC’ Telemarketing Sales Rule (TSR) by misrepresenting that consumers who purchased the defendants’ credit card interest rate reduction services would “receive a 0% or low rate credit card or have their credit card interest rates reduced substantially, including to as low as 4.9% to 9.9%”; “save thousands of dollars in a short time as a result of lowered credit card interest rates”; and “be able to payoff their debts much faster, typically three to five times faster, as a result of lowered credit card interest rates.” The defendants also allegedly violated Section 5 and the TSR by misrepresenting that they would “provide full refunds if consumers do not save thousands of dollars in a short time as a result of lowered credit card interest rates.”

In addition, the defendants allegedly violated the TSR by charging a fee in advance of obtaining an extension of credit for consumers; by charging a fee in advance of providing debt relief services; by calling consumers on the Do Not Call Registry; by failing to honor requests not to call consumers; by failing to transmit caller ID information; by initiating unlawful prerecorded messages; by failing to disclose the identity of the seller, that the purpose of the call is to sell goods or services, and the nature of the goods or services being sold; by failing to pay required Do Not Call Registry fees; and by providing substantial assistance and support to telemarketers they knew or should have known were engaged in violations of the TSR.

In June, defendants 3Point14 Consultants, LLC, d/b/a Elite Planning Group, Key Tech Software Solutions, LLC, d/b/a Key One Solutions, Rares Stelea, and Justin Journay settled the FTC’s charges against them. Those defendants allegedly participated in the scheme by opening merchant and bank accounts for processing consumer payments and by providing substantial assistance to the operation, such as web pages, mail drops, customer service, and shipping of CDs with debt and other financial information to consumers. Those judgments barred the defendants from making misrepresentations about their affiliation with any other person, the goods and services they offer for sale, and the endorsements or substantiation for any products they intend to sell. The order also imposed a $152,412 judgment against Stelea and a $47,440 judgment against Journay, with both judgments suspended due to the defendants’ inability to pay. The defendants were also required to cooperate with the FTC’s case against the remaining six defendants.

The stipulated final judgment and order with ELH Consulting, LLC, d/b/a Proactive Planning Solutions, Purchase Power Solutions, LLC, Allied Corporate Connection, LLC, Complete Financial Strategies, LLC, Emory L. Holley IV, and Lisa Miller announced today permanently prohibits the defendants from engaging in telemarketing or assisting others in telemarketing, from marketing debt relief products and services or assisting others in offering those services, from making misrepresentations in connection with the sale of financial-related products or services, from advertising credit terms different those that actually would be offered to or obtained for consumers, and from misrepresenting material facts regarding any products or services. They must also substantiate any claims they make in the future about the potential benefits or effectiveness of any product or service.

The order also imposes an $11,900,000 monetary judgment against the defendants jointly and severally, which will be partially suspended due to the defendants’ inability to pay. However, the defendants’ assets, currently in receivership, will be transferred to the FTC. The defendants are also barred from benefitting from any consumer information obtained through the operation, and must destroy such information within 30 days of entry of the order.

Companies: ELH Consulting, LLC; Purchase Power Solutions, LLC; Allied Corporate Connection, LLC; Complete Financial Strategies, LLC; 3Point14 Consultants, LLC; Key Tech Software Solutions, LLC

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