FTC Halts Cross-Border Con Artists

Scheme Used Legitimate Web Site Payment Services to Illegally Bill Consumers

A Canadian telemarketing operation that targeted elderly U.S. citizens, conned them into disclosing credit card numbers, and used legitimate Web site payment services to illegally bill the consumers' credit cards for merchandise they didn't order has been shut down by a U.S. District Court at the request of the Federal Trade Commission. The court has issued a temporary restraining order freezing the outfit's assets and halting the deceptive practices.

According to the FTC complaint, online payment services act as intermediaries between consumers and businesses operating over the Internet. They let consumers use credit cards to pay for goods or services, even if the business does not accept credit card payment. Businesses that use online payment services register with the service, and the service provides a link to its own site.

Consumers who want to purchase a product or service advertised on the business's Web site click on the link and are transferred to the online payment services site, where they provide identifying information, including their credit card number. The online payment service charges the consumer's account for the purchase and transfers payment, less a fee for its service, to the business offering the goods or services.

The FTC alleges that the defendants, doing business as Consumer Resource Services (CRS), maintained a Web site that offered certain products for sale. The site contained links to several online payment services. The defendants obtained consumers' credit card information by running a telemarketing operation that supposedly offered free products or services such as a low interest rate credit card or access to unclaimed cash. The defendants told the consumers, many of them elderly, that their credit card numbers were required to receive free goods or services, but that their credit cards would not be charged. The defendants used the information they obtained from the consumers to establish accounts in the consumers' names with online payment services.

Rather than the consumers coming to their CRS Web site and clicking through to use an online payment service to pay for merchandise ordered, the FTC alleges that the defendants themselves clicked through. They then instructed the payment services to charge the consumers' credit cards, generally in the amount of $229, and transfer payment to them. The FTC alleges that many consumers who were charged had not agreed to purchase anything and had never heard of the online payment service identified on their credit card billing statement. In fact, many of the consumers do not even have access to a computer or e-mail, although both are required to open an account with a payment service. Many consumers who were charged for the CRS package did not receive any products from CRS, the FTC alleges. Consumers who did receive a CRS package found that it did not contain a credit card or the products promised by the telemarketers. Instead, the package contained a notebook with a few pages of literature, coupons, and a pamphlet of names, addresses, and telephone numbers of companies that may provide free product samples or coupons.

The FTC charged that the defendants' practices are unfair and deceptive and violate the FTC Act and the Telemarketing Sales Rule (TSR). The FTC has asked the court to permanently bar the defendants from violating the FTC Act and the TSR, order the defendants to give up their ill-gotten gains, and provide consumer redress.

The FTC complaint names 9094-5486 Quebec, Inc., doing business as Consumer Resource Services, Robin Gear, and Nando R. Caporicci, also known as Robert Caporicci. The defendants are located in Montreal, Quebec.

The Commission vote to file the complaint was 5-0. It was filed in U.S. District Court for the Northern District of New York in Albany, under seal. The seal was lifted December 17, 2001.

NOTE:  The Commission authorizes the filing of a complaint when it has "reason to believe" that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant actually has violated the law. The case will be decided by the court.

Copies of the complaint 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, 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.

(Civil Action No.: 01CV1872 (TJM RFT))
(FTC File No. 012 3085)

Contact Information

Media Contact:
Claudia Bourne Farrell or Howard Shapiro
Office of Public Affairs
202-326-2181 or 202-326-2176
Staff Contact:
Elizabeth Grant or Delores Gardner Thompson
Bureau of Consumer Protection
202-326-3299 or 202-326-2264