Canadian Telemarketers Settle FTC Charges

A federal district court has approved a stipulated order including a permanent injunction against Biosource Financial, Inc., Gordon Levy, Jason C. Williams, and Danny Longo, defendants named in a 2002 Federal Trade Commission lawsuit. The order concludes the litigation.

Background

In April 2002, the FTC filed a complaint in federal district court against Consumer Alliance, Inc., a Delaware corporation; Consumer Alliance, Inc., (also known as 1421914 Ontario Inc.), a Canadian corporation; and BioSource Financial, Inc. The FTC also named Steven Winter, Gordon Levoy, Jason C. Williams, and Danny Longo. The three companies operated as a single enterprise out of Toronto and other locations in central Ontario, Canada.

The defendants operated telemarketing boiler rooms allegedly selling bogus credit card protection services and advance-fee credit cards exclusively to U.S. consumers. According to the FTC, the defendants used a variety of devices, including misrepresenting their identity, scare tactics, and blatant lies, to convince consumers that they faced unlimited liability for unauthorized charges on their credit cards if the cards were stolen or lost. The defendants appeared to target senior citizens, charging their victims $299 to $349. The FTC charged that the defendants’ telemarketers typically told consumers that they were affiliated with VISA, MasterCard, or the consumer’s credit card issuer. Often they allegedly told consumers that the protection was affirmatively required either by law or by their credit card issuer.

In other calls, the defendants’ telemarketers allegedly promised U.S. consumers a credit card with a low interest rate, or a low interest rate on the consumer’s existing credit card, for a fee of $349 or $399. At most, those consumers only received a list of banks to which they could apply for credit cards, according to the FTC.

Working in cooperation with the Ontario Provincial Police, the FTC staff coordinated the filing of the civil case with the arrest of most of the individual defendants named in the FTC’s complaint. In June 2003, the Canadian officials obtained a criminal plea agreement, including a total fine of $550,000 (Canadian dollars), from Biosource Financial, Gordon Levoy, Jason C. Williams, and Danny Longo. Shortly thereafter, the FTC obtained a summary judgment as to liability against all the defendants.

In October 2003, the court issued a permanent injunction. The court permanently enjoined all defendants from telemarketing of any kind to U.S. consumers, selling credit card protection or any other credit-related products by any means, and misrepresenting any material fact in the sale of any product. In January 2004, the court entered a monetary judgment in the FTC’s favor against the Consumer Alliance defendants, including Steven Winter, in the amount of $4,011,510 (U.S. dollars).

The Commission vote authorizing the staff to file the Stipulated Order as to Redress was 5-0. The stipulated order was filed in the U.S. District Court for the Northern District of Illinois, Eastern Division, and entered by court on May 20, 2004.

NOTE: This stipulated order is for settlement purposes only and does not constitute an admission by the defendant of a law violation. Stipulated orders have the force of law when signed by the judge.

Copies of the Stipulated Order as to Redress are available from the FTC’s Web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint in English or Spanish (bilingual counselors are available to take complaints), or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at http://www.ftc.gov. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

(FTC Matter No. X020076)
(Civil Action No. 02-C-2429)