Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: FTC Charges Payment Processor with Assisting Telemarketing Operation, (Jun 6, 2013)

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

In an enforcement action against a telemarketing credit card interest rate reduction operation, the FTC has amended its complaint filed in the federal district court in Tampa to assert claims against a payment processor it alleges assisted and facilitated the scheme (FTC v. Innovative Wealth Builders, Inc., FTC File No. 122 3127, Case No. 8:13-cv-00123-VMC-EAJ).

According to the FTC’s amended complaint, Independant Resources Network Corp. (IRN) provided payment processing services for Innovative Wealth Builders, Inc. (IWB), an organization that allegedly made misrepresentation and engaged in unauthorized billing in violation of the FTC Act, and committed various violations of the FTC’s Telemarketing Sales Rule (TSR), in the course of marketing purported credit card interest rate reduction services. The FTC asserts that IRN knew, or consciously avoided knowing, about IWB’s unlawful conduct, but continued to

The complaint notes that the average credit card transaction chargeback rate is below one percent, but that the chargeback rate for IWB’s transactions exceeded 20 percent from January 2010 to January 2013, and sometimes climbed as high as 40 percent. IRN also allegedly knew, or consciously avoided knowing, that IWB was a telemarketing company, that it offered debt relief services, that IWB collected an up-front fee for its services, that IWB had numerous consumer complaints against it online, and that it had an “F” rating with the Better Business Bureau. IRN allegedly received numerous chargeback disputes from IWB customers stating that IWB “had not reduced their credit interest rates, saved them money on their credit card debts, or helped them pay off their debts faster,” and that “IWB made unauthorized charges to their credit cards.” IRN also was aware of a November 2010 investigation of IWB by the Florida Attorney General, and of the FTC investigation beginning July 2012. IRN also received fraud alerts from MasterCard and Discover.

The complaint alleges that IRN assisted IWB by permitting it to “access the credit card networks and charge millions of dollars of fees to the credit cards of consumers.” IRN also allegedly assisted IWB in responding to chargeback disputes and recommended ways to defeat them. IRN also made “numerous cash advances” to IWB. IRN allegedly profited from IWB’s activities by collecting a portion of each credit card transaction, by collecting fees for chargebacks, and by making the cash advances. The complaint asserts that IRN’s activities constituted assisting and facilitating deceptive and abusive telemarketing acts or practices in violation of the TSR.

The FTC filed its complaint against IWB on January 14, 2013. The federal district court in Tampa issued a temporary restraining order against the operation on the same day.

Companies: Innovative Wealth Builders, Inc.; Independant Resources Network Corp.

News: ConsumerProtection FederalTradeCommissionNews