Thanks to two recent settlements, marketers who sold consumers on deceptive claims that they could reduce credit card interest rates have been put out of business, according to a recent announcement by the Federal Trade Commission.
The companies claimed, falsely, that they could reduce consumers’ credit card interest rates and lower their debts. They committed the scam by breaking telecommunications laws; infractions included the use of illegal robocalls and calling people on the federal Do Not Call list.
“The last thing debt-ridden consumers need is to be deluged by illegal robocalls — especially when all the calls are offering is a scam,” FTC Chairman Jon Leibowitz said in a December 2009 press release about companies accused of this practice.
The settlements announced last week resolve charges against five companies involved in two separate scams. In one scheme, consumers received automated phone calls that many believed came from their credit card companies. The calls offered to save people at least $2,500 in credit card interest rate payments, in exchange for a $1,590 fee upfront.
But the only things victims received were instructions on how to save money on interest by paying their credit cards off early. People who demanded refunds either were rejected completely or forced to pay a $199 “nonrefundable fee.”
The two companies involved in the scam, Advanced Management Services NW and PDM International Inc., stole $21.9 million from consumers. The companies’ owners will be forced to surrender pretty much everything they own, including a boat, luxury cars, ATVs and jet skis. If the owners try to lie about their assets or hide some of their wealth, they will be forced to repay the full $21.9 million, according to the FTC.
The other scam, which resulted in five settlements totaling $30 million, relied upon similar claims. After charging consumers an upfront fee of between $495 to $1,495, companies involved did nothing to negotiate lower rates from credit card companies. The five companies and their owners involved with the cases will be permanently banned from selling debt relief services.
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Image: mulaohu, via Flickr