An operation that deceptively sells its gold card by representing that it is a MasterCard or Visa has been shut down by a U. S. District Court at the request of the Federal Trade Commission. According to the FTC, the defendants enticed consumers who had negative credit histories with promises of high credit limits and zero percent interest rates. Instead, the "merchant card" they provided only allowed users to purchase items from the defendants' Web sites or catalogs. The defendants' assets have been frozen and a receiver has been appointed pending trial on FTC charges that the scheme violates federal law.
The FTC complaint names Salyon, Inc., d/b/a First Liberty Financial, Salyon National Credit, Shop Salyon, Quicklinks.com, and their principals, Mark Joseph Lyon, John Donald Lyon, and Kurt Charles Uhler. The defendants are based in Aliso Viejo, California and Lake Forest, California.
The FTC alleged that the defendants targeted consumers with negative credit histories, using pitches like, "You can re-establish your good credit!" and "Account Status: APPROVED GOLD CARD." For fees ranging from $49 to $64, the defendants offered "pre-approved" credit cards with $15,000 credit limits, and zero percent interest rates for the first year. Their mailings claimed that consumers who posted a favorable payment history with the new card would have these payment histories reported to the three major credit reporting agencies. They also claimed that consumers who maintained a favorable payment record would be issued a MasterCard with even better terms -- a lifetime zero percentage rate. According to the FTC, the defendants failed to disclose that the cards they issued could only be used to purchase items from their own catalogs and Web sites, and that consumers could only charge 30 percent to 50 percent of the purchase price. They had to pay the remainder using a check or money-order. Consumers only learned the cards were not full service credit cards after they had paid the defendants, the FTC alleged.
The FTC complaint charges that the defendants misrepresented that they offer a MasterCard, Visa or equivalent credit card; that they offer a second MasterCard that features a lifetime zero percent interest rate; that they will report consumers' favorable credit histories to the three major credit reporting agencies; and that these misrepresentations violate the FTC Act. The complaint alleges that the defendants' failure to disclose that the card can only be used to purchase items from their Web sites or catalogs, and the failure to disclose that the card cannot be used to pay the entire purchase price, also violate federal law.
At the request of the FTC, the court issued a temporary restraining order, an asset freeze, and the appointment of a receiver. The agency will seek a preliminary and permanent injunction and consumer redress.
NOTE: The Commission files 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 has actually 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 https://www.ftc.gov/ftc/complaint.htm. 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 No. 01 23124)