FOR RELEASE: MAY 2, 1991 FTC FILES SUIT TO HALT PRACTICES OF TWO HUNTSVILLE COMPANIES THAT SUPPLY TELEMARKETERS OF CREDIT-RELATED PRODUCTS; FTC WINS TEMPORARY RESTRAINING ORDER The Federal Trade Commission has won a temporary restraining order halting the deceptive practices of two Huntsville, Alabama, companies charged with marketing -- and assisting numerous tele- marketing boilerrooms nationwide to market -- credit-related products using false and deceptive claims. The FTC is seeking a permanent injunction, funds to redress consumers victimized by the deceptive practices, and other relief. The FTC complaint names Listworld, Inc.; AFS, Inc. (which does business as American Financial Services, Inc.); Daniel Klibanoff, president of Listworld and co-owner of AFS; Robert Crooks, co-owner and vice president of AFS and executive vice president of Listworld, and Phil Warnick, co-owner and secretary- treasurer of AFS. According to the complaint, Listworld, AFS, and the indi- vidual defendants sold directly to consumers -- and recruited other telemarketers to sell to consumers -- two credit-related products: a low-interest credit card package targeted to con- sumers with high balances on their Visa and Mastercard credit cards, and a "Credit Today" package targeted to consumers who had experienced trouble obtaining credit. The packages, which sold from $89 to $169 or more, contained only basic consumer advice and, in the case of the low-interest package, a list of banks that offered low-interest credit cards, the FTC said. To help market the credit-related products, the FTC alleges that the defendants provided numerous telemarketers with everything but the telephone needed to sell their products. - more - Listworld--05/02/91) According to the complaint, the defendants' services included: -- preparing post cards or letters representing to consumers that they were eligible for unsecured or low-interest credit cards and other forms of credit; -- mailing the post cards using targeted lists of consumers with high credit-card balances or recent credit rejections; -- preparing telephone sales scripts for telemarketers representing that (a) consumers purchasing the defendants' products could get one or more credit cards by paying a one- time processing fee, (b) telemarketers were associated with financial institutions offering credit cards, and (c) telemarketers knew consumers would definitely receive credit cards; -- arranging for the delivery of the low-interest and "Credit Today" packages to consumers; -- providing various means for telemarketers to collect consumer payments, including "900" telephone numbers, credit card processing accounts assigned to other merchants, and a system for debiting consumers' checking accounts by tele- phone; and -- advising telemarketers selling the defendants' products how to respond to consumers with complaints or who made requests for refunds. According to the FTC's complaint, the defendants' repre- sentations for both the low-interest package and the "Credit Today" package, which were repeated by telemarketers throughout the country, were false and deceptive. The FTC alleges that consumers who purchased the low-interest package did not receive credit cards; moreover, neither the defendants nor their telemarketers were affiliated with any financial institution, and they could not have known whether the consumers were eligible to receive low-interest credit cards from any financial institution. Consumers who purchased the "Credit Today" package did not receive any credit cards either, according to the complaint. Further, the FTC charged, consumers following the defendant's recommendations would have had to invest substantial additional amounts of money to obtain unsecured credit cards, and even if they could afford the cost, it took many months to obtain the unsecured cards. Listworld--05/02/91) In addition, according to the FTC complaint, the defendants knew or should have known that their client telemarketers were falsely representing that consumers could obtain a full refund if they were unable to get the promised credit. Many consumers did not receive refunds, the FTC said. Those who did seek refunds sometimes found they had to meet previously undisclosed and unreasonable conditions, such as providing the telemarketers with copies of credit denial notices from numerous financial institutions, the complaint alleged. The FTC's Seattle regional office handled the investigation, with the assistance of the FTC's Atlanta regional office. The complaint was filed under seal on April 30 in the U.S. District Court for the Northern District of Alabama, in Birmingham. The Court granted the temporary restraining order, which included an order freezing the defendant's assets, on the same day. The seal was lifted yesterday. In conjunction with the FTC action, Oregon Attorney General Dave Frohnmayer filed suit today in Marion County Circuit Court, in Salem, Oregon, alleging that Listworld violated Oregon's tele- marketing registration and deceptive trade practices laws. Pre- viously, the same court, acting on a separate complaint filed by Attorney General Frohnmayer, enjoined the operations of First National Corporation, a Portland telephone boilerroom that was using products and services supplied by Listworld and others. In addition to the assistance provided by the state of Oregon, the FTC was also assisted in its investigation by the offices of the Attorneys General of Alabama, Texas, and Colorado, the Nevada Division of Consumer Affairs, Visa and Mastercard, the Better Business Bureau of Northern Alabama, and the Bankcard Holders of America. Both Listworld and AFS are based in Huntsville, Alabama, and the individual defendants reside in that area as well. 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 defendants have actually violated the law. The case will be decided by the court. Listworld--05/02/91) Copies of the complaint, attached to which are samples of scripts and advertisements, are available from the FTC's Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue N.W., Washington, D.C. 20580; 202-326-2222; TTY 202-326-2502. # # # MEDIA CONTACT: Bonnie Jansen, Office of Public Affairs 202-326-2161 STAFF CONTACT: Charles Harwood, Seattle Regional Office 2806 Federal Building, 915 Second Avenue Seattle, WA 98174 206-553-4656 (Civil No. CV-91-N-0979-NE) (Listwrld)