Canadian Telemarketers to Pay for Duping U.S. Consumers into Buying Bogus Credit-related Products

Toronto-based telemarketers are banned from selling or telemarketing credit-related goods or services as part of a settlement with the Federal Trade Commission. The FTC charged the defendants, 1st Beneficial Credit Servics LLC, Platinum Express Benefits LLC, American Capitol Benefits LLC, and their principals, Viktor Golub, Armand Petrov, and Golan Rabin, with targeting U.S. consumers with offers of guaranteed Visa or MasterCard credit cards with substantial credit limits for an advance fee. The FTC alleged that the defendants’ practices violated the Telemarketing Sales Rule (TSR) and the FTC Act. The settlement also prohibits the defendants from misrepresenting that, after paying a fee, consumers will, or are highly likely to, receive an unsecured major credit card.

The FTC filed charges against the defendants in August 2002 as part of “Operation No-Credit” financial fraud sweep. The complaint charged the defendants with telemarketing major unsecured credit cards, such as Visa and MasterCard, to U.S. consumers in exchange for an advance fee of $199 to $249. The FTC alleged that consumers never received the promised credit card. Those consumers who received anything at all only received information on improving credit or a catalog card that was virtually worthless, according to the FTC.

The settlement bans the defendants from selling or distributing advance-fee credit cards, via any mechanism, and prohibits them from telemarketing credit-related goods and services. The order prohibits the defendants from future violations of the FTC Act and the TSR. The order requires the defendants to pay approximately $190,000 for consumer redress. The settlement contains an avalanche clause that will trigger a $6.4 million judgment if it is found that the defendants materially misrepresented their assets. The settlement also contains various recordkeeping provisions to assist the FTC in monitoring the defendants’ compliance.

The Commission vote to authorize staff to file the stipulated final order was 5-0. It was filed in the U.S. District Court for the Northern District of Ohio, Eastern Division, in Cleveland, Ohio, on September 12, 2003, and approved by the court on September 19, 2003.

NOTE: This stipulated final order is for settlement purposes only and does not constitute an admission by the defendants of a law violation. Stipulated final orders have 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, 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.

(FTC Matter No. X020097)
(Civil Action No. 1:02CV1591)