Atlanta Telemarketers Offering "Guaranteed" Credit Cards for a Fee Deceived Consumers, FTC Said

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A federal district court in Atlanta has temporarily halted what the Federal Trade Commission has alleged to be a deceptive telemarketing scheme offering "guaranteed" unsecured credit cards for an advance fee. The FTC charged that telemarketers for the defendants, M.J.S. Financial Services, Inc., and Resource Travel Service, Inc. (RTS), falsely represented to consumers nationwide that they have been selected to receive a major credit card for a one-time, up-front processing fee ranging from $79.95 to $149.95. The defendants persuaded consumers to divulge their bank account information, and, in numerous instances, debited their checking accounts. The FTC charged that the defendants did not provide credit cards to the consumers who paid the fees. Instead, some consumers received application forms allowing them to apply for credit cards, with additional fees, through a bank based on the bank's own credit criteria.

The FTC charged that such representations violate the FTC Act and the Telemarketing Sales Rule. In fact, contrary to what the defendants' telemarketers tell consumers, M.J.S. and RTS did not approve any credit card applications, nor did they have the ability to provide credit cards. Only a card-issuing bank can provide Visa or MasterCard credit cards to consumers, the FTC said. In addition to the temporary restraining order, the court has ordered an asset freeze to preserve funds for consumer redress.

The FTC's complaint detailing the allegations also names Michael Jerome Smith, CEO of both M.J.S. Financial Services, Inc. and Resource Travel Service Inc.; Tom Reynolds, an officer of M.J.S; and Valerie Ranger, an officer of RTS. All of the defendants are located in Atlanta, Georgia.

According to the complaint, M.J.S. and RTS, through unsolicited telephone calls, told consumers that they had been approved for, or were guaranteed to receive, an unsecured major credit card and that this card would be delivered in return for a one-time fee charged by M.J.S or RTS. After receiving the consumers' agreement and their bank account information, the verifiers told consumers that they would receive a form, and all they had to do to receive their major credit card was "simply" complete the form and return it to the bank. At no time did the defendants' telemarketers tell consumers that a credit card would be issued to them only if they applied to a bank and met the qualifying conditions established by that bank. In addition, defendants failed to disclose to consumers the additional processing and annual fees charged by the issuing bank.

Further, the FTC's complaint alleges that consumers have suffered substantial money loss as a result of the defendants' unlawful practices. The FTC asked the court to issue a permanent injunction prohibiting the defendants from violating the FTC Act and the Telemarketing Sales Rule in the future, and to order the defendants to pay consumer redress.

The FTC filed its complaint under seal in the U.S. District Court for the Northern District of Georgia, Atlanta Division, on October 9. The seal was lifted on October 14. The Commission vote to file the complaint was 4-0.

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.

The FTC has a number of consumer brochures that offer consumers tips spotting telemarketing scams and how to avoid them, as well as information on choosing and using credit cards.

Copies of the complaint, as well as the consumer brochures, 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 for the hearing impaired 1-866-653-4261. To find out the latest FTC news as it is announced, call the FTC's NewsPhone recording at 202-326-2710. FTC news releases and other materials also are available on the Internet at the FTC's World Wide Web Site at:

Contact Information

Media Contact:
Brenda A. Mack, 
Office of Public Affairs
Staff Contact:
Chris M. Couillou or 
Andrea L. Foster
Atlanta Regional Office
60 Forsyth Street, S.W., Suite 5M35
Atlanta, Georgia 30303

(Civil Action No. 1:97-CV-3087-ODE)
(FTC File No. 972 3219)