Seller of Worthless Credit Card Loss "Protection" Barred From Similar Fraudulent Sales

Final Order a Result of FTC's "Protection Deception" Enforcement Sweep

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Unscrupulous telemarketers continue to peddle worthless credit card loss "protection," and the Federal Trade Commission continues to work to stop them from doing so. In the latest action, announced today, the Commission has filed a stipulated final order for permanent injunction against Phoenix, Arizona-based Capital Card Services, Inc. (CCS) and its president Cory M. Harris. Under the terms of the order, the defendants will be prohibited from offering such "loss protection services" in the future and must post a $200,000 bond before engaging in any future telemarketing activities. The order is the result of a complaint brought against CCS and Harris as part of the Commission's "Operation Protection Deception" law enforcement sweep announced last year.

According to the FTC's complaint, CCS and Harris violated the FTC Act by selling what was purported to be credit card loss "protection" by: 1) claiming to be calling consumers from, or on the behalf of, their credit card issuers; 2) claiming that consumers could be held fully liable for all unauthorized charges made to their credit card accounts; and 3) falsely representing that the consumers had authorized the purchases for which they were charged. In addition, by making false statements to induce consumers to pay for goods and services in connection with the telemarketing of their credit card loss "protection" programs, the FTC alleged the defendants violated the FTC's Telemarketing Sales Rule (TSR). In general, it is illegal to represent that any consumer is liable for unauthorized charges on his credit card in excess of the $50 limit set forth by federal regulations.

The final order announced today contains strong injunctive relief. The defendants are permanently banned from engaging in the sale of credit loss or "protection" services. To address the possibility of future law violations, the defendants are prohibited from the specific activities detailed in the Commission's complaint, including: 1) representing that they are calling from, or on the behalf of, consumers' credit card issuers; 2) that consumers could be held fully liable for all unauthorized charges made to their credit card accounts; and 3) that consumers had agreed to the purchases for which their accounts had been debited. The order also prohibits the defendants from failing to comply with the TSR. In addition, the order contains broad fencing-in provisions that prohibit misrepresentations about: 1) consumers' credit-related rights or obligations under the law; 2) any facts that would be material to a consumer's decision to purchase a good or service; and 3) installment payments for any product or service.

The order also prohibits the defendants from telemarketing any product or service without first posting a $200,000 bond to ensure that consumers would be protected from any future illegal activity. In addition, the order bars the defendants from distributing their customer list to anyone other than FTC or law enforcement personnel, unless ordered by a court to do so.

Finally, while neither CCS nor Harris currently has significant assets, the order contains a $2 million judgment against CCS to allow the FTC to attempt to collect on any corporate assets. The order requires Harris to pay the amount that he does have in a bank account - $4,790. The order also contains standard record-keeping, monitoring and compliance provisions.

The Commission vote to authorize staff to file the stipulated final judgment was 5-0. The stipulated final judgment was filed in the United States District Court in Phoenix, Arizona.

NOTE: This stipulated final judgment is for settlement purposes only and does not constitute an admission by the defendants of a law violation. Stipulated judgments have the force of law when signed by the judge.

Copies of the documents mentioned in this release are available from the FTC's Web site at 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 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. X010005)
(Civil Action Number: CV '00 1993 PHX EHC)
(Capital Card

Contact Information

Media Contact:
Mitchell J. Katz
Office of Public Affairs
Staff Contact:
Jerry Steiner
FTC Western Region - San Francisco

Raymond McKown
FTC Western Region - Los Angeles