Personal Finance

FTC Cracks Down on Robocall Fraud

Comments 0 Comments

In the past several months, as many as a few million consumers nationwide have received automated phone calls from someone claiming to be “Rachel” from “Cardholder Services,” but the FTC recently cracked down on the companies responsible for this misleading telemarketing effort.

These robocalls told consumers that they could receive significant cuts to their current credit card interest rates, but typically got no such relief from the telemarketers on the other line, according to a report from the Federal Trade Commission. As such, the agency recently cracked down on five companies that were behind these and similar calls – also claiming to be a representative from “Cardholder Services,” which implied a relationship with a bank or lender that simply never existed – based in Arizona and Florida. Other state agencies recently came down on similar companies in those states, as well as in Arkansas.

“At the FTC, Rachel from Cardholder Services is public enemy number one,” said FTC chairman Jon Leibowitz. “We’re cracking down on illegal robocalls by bringing law enforcement actions and pursuing technical solutions to the problem.”

During these calls, consumers who pressed “1″ were connected to live telemarketers who promised to reduce their credit card interest rates to 6.9 or 0 percent, but once they were approved, they were asked to pay an upfront fee of between a few hundred dollars and nearly $3,000, depending on the person. However, after the money was paid, the companies typically did little or nothing to actually help them obtain lower rates. Some signed consumers up for cards with the advertised rates on an introductory basis, and others connected them to their lender and verbally requested a lower rate. Consumers could do either on their own, without paying a large sum of money to a third party.

The companies were charged with violations of the FTC Act for deliberately misrepresenting that customers who purchased their services that they could get lower rates and save thousands of dollars as a result, the report said. Four of the five were charged with similar violated related to misrepresenting how quickly borrowers could pay down their debts as a result of their signing up.

While many consumers may want to lower their credit card bills and monthly payments, most unsolicited services that charge them up-front are likely to be more harmful than helpful.

Image: aussiegall, via Flickr

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Find out where you stand.
Get your FREE personalized credit report card.

Sign Up Now
X

Start Maximizing Your Credit Today

Credit ScoreGet a FREE personalized credit check-up today.

Get Started - It's Free!