Defendants Charged with Selling Nonexistent Credit Cards
A group of U.S. and Canadian telemarketers will pay $415,000 to settle Federal Trade Commission charges they were selling nonexistent credit cards to U.S. consumers, the agency announced today. The defendants are banned from selling credit-related products through telemarketing and must stop their attempts to deceive consumers into giving out their personal financial information.
According to the Commission, the defendants targeted consumers with poor credit, offering major credit cards with a $2,500 limit for an advance fee of $197 to $300. The telemarketers claimed to have information showing that the consumers recently had been denied credit, and pitched the credit card offer as a means of improving their credit rating. Implying that they were merely verifying data, the defendants requested information about the consumer’s bank accounts, such as account numbers, routing numbers, and the account holder’s name, as well as personal identifying information, such as date of birth, mother’s maiden name, and Social Security number. They also allegedly misrepresented that they had the ability and authority to issue major credit cards.
Consumers who paid the fees never received credit cards. At best, some got a package containing a credit repair book with coupons, a list of banks that issue credit cards, and other materials with little or no value.
The defendants, who ran their operation from Palm Beach, Florida, and Montreal, Canada, are three Florida corporations (Sun Spectrum Communications Organization, Inc.; North American Communications Organization, Inc.; and WWCI2002, Inc.) and their principals, William H. Martell and Tracey A. Bascove, and one Canadian corporation (9106-7843 Quebec, Inc.) and its principals, Mitchel Kastner, Ronald Corber, and Jason Kastner. When calling consumers, the defendants used fictitious business names, including “Royal Credit Solutions,” “Imperial Consumer Services,” and “Beneficial Client Care.”
As part of the settlement, the defendants are banned from telemarketing credit-related products and from assisting others involved in the industry. They also are prohibited from using false or misleading statements when marketing any product and from violating any provision of the FTC’s Telemarketing Sales Rule. The Court’s order also prohibits the defendants from violating the Gramm-Leach-Bliley Act by using false representations to get consumers to divulge personal financial information. The defendants will pay more than $415,000 in consumer redress, which is based on their ability to pay. They also are subject to a suspended judgment of just over $9 million, the total amount of consumer injury in this case, which they will be responsible for if it is later found they misrepresented their financial status. Finally, the defendants cannot sell or transfer their lists of customers. The order contains standard monitoring and record-keeping provisions.
The FTC points to this case as another example of effective cooperation and coordination among U.S. federal, state, and local law enforcement agencies and Canadian authorities. Over the course of its investigation, the FTC worked with Competition Bureau Canada, the Royal Canadian Mounted Police (RCMP), and Project COLT, a cross-border law enforcement task force that operates out of RCMP headquarters in Montreal with the participation of the RCMP, the Quebec Provincial Police, the Montreal City Police Service, Competition Bureau Canada, the FBI, the U.S. Department of Homeland Security’s Office of Immigration and Customs Enforcement, the U.S. Postal Inspection Service, and the FTC. In the United States, the FTC worked with Bureau of Financial Investigations of the Florida Office of Financial Regulation in West Palm Beach, the United States Postal Service in West Palm Beach, and the Better Business Bureau of Southeast Florida. Information and assistance provided by each of these agencies was crucial in the successful conclusion of this case.
The Commission vote authorizing the staff to file the stipulated final order against all defendants except William H. Martell was 4-0. The Commission vote authorizing the staff to file the stipulated final order for Martell was 3-1. Commissioner Jon Leibowitz concurred in part and dissented in part, writing in a statement that, “the Commission should have pursued further monetary relief from [defendant Martell], including possibly using the recently enacted bankruptcy laws to trump this defendant’s efforts to shield assets in his Florida homestead.” The stipulated final order for permanent injunction was filed in the U.S. District Court for the Southern District of Florida on October 3, 2005.
NOTE: This stipulated final order is for settlement purposes only and does not constitute an admission by the defendant of a law violation. A stipulated final order has the force of law when signed by the judge.
Copies of the stipulated final order 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, DC 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 File # X040015)
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