Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: Credit card interest rate reduction telemarketing operation settles FTC charges, (Jul 17, 2013)

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

A telemarketing operation offering an allegedly fraudulent credit card interest rate reduction service has settled FTC charges that it violated the FTC Act and the FTC’s Telemarketing Sales Rule, the FTC announced yesterday (FTC v. National Card Monitor, LLC, FTC File No. 122 3200, Case No. 12-2521-PHX-JHT). Judge James A. Teilborg signed the stipulated final settlement order on July 15, 2013.

The settlement will permanently ban National Card Monitor, LLC, also doing business as Nationwide Card Monitor, and its principal, James Eric Cox, from telemarketing or assisting others in telemarketing, from marketing any credit-related product or service, from making any misrepresentations in the marketing or sale of financial products, and from making a range of misrepresentations with respect to the marketing of any other products or services. They must also possess and rely upon competent and reliable evidence regarding the benefit, performance, and efficacy of any product or service they market.

The stipulated order also imposes a monetary judgment of $2,329,409 on the defendants, representing the amount of harm they allegedly caused, which will be suspended upon payment of all remaining frozen funds after receivership expenses are paid. The full judgment would immediately come due if the defendants were found to have misrepresented their financial condition. They are also barred from disclosing or benefitting from consumer information they acquired, must dispose of that information within thirty days of entry of the order, and may not attempt to collect any payment from a consumer who agreed to purchase a credit-related product or service.

According to the FTC’s complaint, filed in the federal district court in Phoenix, the operation had called consumers to offer them purported credit card interest rate reduction services. The operation 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 alleged, the company would not honor its money-back guarantee. The FTC also alleged 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 alleged 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.

Companies: National Card Monitor LLC

News: ConsumerProtection FederalTradeCommissionNews