Card tricks?

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In the market for a $430 case of shower caps or some “dolphin shaped craft embellishments”? Have they got a deal for you! But for people who thought they were paying $99 up front and $19 a month for a credit card, all they got was access to the defendants’ online store, which sold bulk quantities of off-brand, overpriced items.

That’s what the FTC alleges in its lawsuit against Apogee One Enterprises, related companies, and four individuals who peddled the “Platinum Trust Card” and “Express Platinum Card.” According to the FTC, the defendants targeted their telemarketing efforts toward cash-strapped consumers, including those who had just applied for payday loans. The FTC says telemarketers told people they had qualified for a regular Visa, MasterCard, or American Express card with a 0% interest rate and a credit limit of between $5000 to $9500. Just pay an upfront fee ranging from $69 to $99 and then a monthly fee of $19.

So what did people get for their money? The card was “plastic,” all right — but not in the way consumers thought. According to the FTC, the card wasn’t honored at regular stores and could only be used to buy stuff from the defendants’ online site, which featured “a seemingly random assortment of off-brand, overpriced, and downright bizarre products, most of which are sold only in comically large quantities.” (For example, even if you’re in the market for 3,240 “dolphin shaped craft embellishments” — and we can’t wait to see what you plan to do with them — $356.40 seems steep.) What’s more, the defendants wouldn’t accept their own card for the full purchase price of the stuff they sold. Consumers had to come up with another form of payment to cover as much as half the tab.

The lawsuit also challenges the defendants’ billing practices. According to the FTC, the loan applications the defendants used as telemarketing leads typically contained bank account numbers, Social Security numbers, and home addresses — which the FTC says gave the defendants the information they needed to make withdrawals from people’s accounts. The complaint alleges that many consumers who rejected their sales pitch found that money had been taken out of their accounts without their permission. What if people tried to complain, cancel their card, or get their money back? The FTC’s court papers lay out “a customer service nightmare,” including long waits on hold followed by a sudden hang-up. One consumer recounted 120 unsuccessful calls to the defendants’ customer service line.

A federal judge has temporarily halted the operation, freezing their assets and appointing a receiver to control the business, pending a resolution to the case.

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