Defendants Agree to Pay $85,000 for Alleged Violations Related to the Sale of Worthless Credit Card Protection

Commission's Complaint Stemmed from FTC's "Operation Protection Deception"

Share This Page



The Federal Trade Commission today announced court settlements with two companies and their principals under which the defendants will pay a total of $85,000 for allegedly telemarketing worthless credit card protection insurance to consumers nationwide. The terms of the stipulated final judgments, which are subject to the court's approval, also provide strong injunctive relief against the defendants - ranging from a ban on making such credit card protection pitches to a total ban on all telemarketing activities - to ensure consumers are protected from similar activities in the future.

Stemming from a complaint brought in the FTC's "Operation Protection Deception" law enforcement sweep, the judgments announced today settle allegations that defendants Consumer Repair Services, Inc. (CRS), Mark Steinberg, and James DeHart and defendants Manhattan West Marketing (MWM) and Frank Ciaravino violated both the FTC Act and the Telemarketing Sales Rule (TSR) in connection with the sale and marketing of credit card loss protection programs. CRS is a Georgia-based corporation. MWM is a Nevada corporation located in North Hollywood, California.

"Federal law protects consumers against unauthorized charges over $50," said J. Howard Beales III, Director of the FTC's Bureau of Consumer Protection. "While the thought of credit insurance protection may be appealing, in reality, it's a nearly worthless service."

The Commission's Charges

According to the Commission, from late 1999 to October of 2000, CRS used various boiler rooms to cold-call consumers, making a number of misrepresentations to induce them to buy the company's credit card protection service. CRS allegedly told consumers that their credit card numbers were available on the Internet and could be used to make unauthorized charges. Further, according to the FTC, the telemarketers told consumers either that their cards provided no protection against such theft or that because of Internet fraud, their liability for unauthorized charges was no longer limited to $50. CRS allegedly claimed that for $295 the company would protect consumers against such charges, repaying them for any unauthorized charges that were made.

In addition, according to the FTC's complaint, CRS misrepresented to consumers that it was either authorized by, or affiliated with, VISA, MasterCard, or the consumer's credit card issuer. At times, the company charged consumers for the $295 package even if they did not agree to buy it. The company also allegedly misrepresented that the consumers' satisfaction was guaranteed and that they had 30 days to decide whether they wanted the protection. The Commission contends that CRS did not honor this guarantee and never refunded consumers' money when they tried to get it back.

The Commission's complaint alleged that MWM provided CRS's fulfillment services and contracted to telemarket its credit card loss protection service. Using sales scripts to induce consumers to purchase the "protection," MWM then sent out information describing the packages and responded to consumer complaints and refund requests, trying to "save" sales made through prior pitches if the consumers tried to cancel.

The FTC's complaint alleges that the defendants' misrepresentations and failure to comply with stated refund policies or guarantees, violated the FTC Act and the TSR.

Terms of the Stipulated Orders

The Commission has filed two separate final stipulated judgments with the court regarding defendants CRS, Steinberg, and DeHart, and defendants MWM and Ciaravino.

Injunctive Relief. The stipulated order bans CRS, Steinberg, and DeHart from marketing or helping others to market credit card loss protection. The order naming MWM and Ciaravino would ban them from all telemarketing activities or assisting others to engage in telemarketing in the future. Both orders also prohibit the defendants from engaging in acts that violate the FTC Act and/or the TSR, and from making any material misrepresentations in connection with the sale of any goods or services.

Monetary Relief. The CRS judgment requires Steinberg and DeHart to pay $43,000 in relief. Steinberg and DeHart also have paid more than $46,000 to the CRS receivership to cover administrative costs.

Through a separate order, MWM and Ciaravino will pay $42,000 in monetary relief. The MWM order also contains a requirement that would impose a $1 million judgment if the defendants are found to have misrepresented their financial condition.

Both judgments also contain provisions prohibiting the defendants from distributing customer records, as well as provisions requiring them to distribute the final order, monitor their sales personnel, maintain records, notify the Commission regarding their compliance with the orders' terms, and permit the FTC to monitor their compliance through access to their premises and in other ways.

The Commission vote to file the complaints and stipulated final judgments was 5-0. They were filed in the U.S. District Court for the Central District of California in Los Angeles on February 5, 2002.

NOTE: Stipulated final judgments are for settlement purposes only and do not constitute an admission by the defendants of a law violation. Consent judgments have the force of law when signed by the judge.

Copies of the stipulated final orders 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. X010008; Civ. Action No. 00-11218 CM(RZx))

Contact Information

Mitchell J. Katz,
Office of Public Affairs
Thomas J. Syta
FTC Western Region, Los Angeles