Companies Making Calls Promising to Reduce Credit Card Interest Rates Get Ass Slapped By FTC

I can’t tell you how many calls I get from autodialers promising to reduce the interest rates on my credit cards. I’m not alone in receiving these calls. My only regret is I’ve been unable to record the calls when they come in.

Well the Federal Trade Commission has take action against companies that make these calls.

At the request of the Federal Trade Commission, a federal judge has put a stop to three companies’ allegedly deceptive telemarketing calls, including robocalls, that promised to reduce consumers’ credit card interest rates; frozen their assets; and appointed a receiver to take control of the business.

According to the FTC’s complaint, over the past two years, the defendants made or authorized calls to consumers nationwide, claiming that they could negotiate with credit card issuers to substantially lower the interest rates on the consumers’ credit cards. They also allegedly delivered prerecorded “robocalls” that consisted of urgent-sounding messages from “Card Services” or “Financial Services,” stating that consumers needed to “press one” to speak to a representative about their credit card interest rates. Many consumers believed the calls were from their credit card issuers.

Consumers who signed up for the defendants’ services were charged from $499 to $1,590 up-front and promised their money back if the callers failed to deliver at least $2,500 in interest rate savings, the FTC alleged. Instead of arranging reduced interest rates, the complaint states, the defendants sent consumers instructions to pay down their credit card debts early, thus saving money on interest.

Consumers who complained and demanded refunds allegedly were denied outright, got the run-around, or had a $199 “nonrefundable fee” deducted from their refund.

“The last thing debt-ridden consumers need is to be deluged by illegal robocalls – especially when all the calls are offering is a scam,” said FTC Chairman Jon Leibowitz.

The FTC’s complaint alleged that AMS, Rapid Reduction, PDMI, and their owners violated the FTC Act and the Do Not Call and other provisions of the Telemarketing Sales Rule by:

  • deceptively promising consumers they could reduce their credit card interest rates;
  • misleading consumers about their refund policies;
  • illegally calling numbers on the National Do Not Call Registry;
  • failing to honor consumers’ requests not to be called again; and
  • making pre-recorded telemarketing calls to consumers without their express written consent. Nearly all such calls have been illegal since September 1, 2009.

U.S. District Judge Lonny Suko has issued an order appointing two receivers to take over the businesses, and freezing the assets of Advanced Management Services NW LLC, doing business as AMS Financial, Rapid Reduction System’s [sic] LLC, and their principals Ryan Bishop and Michael Rohlf, all of Spokane, Washington, and PDM International, Inc., doing business as Priority Direct Marketing International, Inc. (PDMI) of Bedford, Texas, and its principal William Fithian, of Colleyville, Texas.

The FTC vote approving the complaint was 5-0. It was filed under seal in the U.S. District Court for the Eastern District of Washington on May 10, 2010. The court granted an order temporarily barring the alleged conduct on May 10, 2010. The seal was lifted on May 11, 2010, the day the Commission served the temporary restraining order.

The FTC acknowledges the assistance of Better Business Bureau of Eastern Washington, Northern Idaho, and Montana, and the BBB of Fort Worth, Texas, the U.S. Postal Inspection Service; the Bedford, Texas, Police Department; and the attorneys general of Illinois, Minnesota, North Carolina, North Dakota, Washington, and West Virginia. The FTC also acknowledges that the Internal Revenue Service, the Federal Bureau of Investigation, and the U.S. Secret Service are conducting a separate but parallel criminal investigation and that they executed search warrants on one business and one individual’s home when the FTC served the temporary restraining order.

NOTE: The Commission issues 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 issuance of a complaint is not a finding or ruling that the defendant has violated the law.

From the Complaint

DEFENDANTS

5. Defendant Advanced Management Services NW LLC, also doing business as AMS Financial, Rapid Reduction Systems, and Client Services Group (“AMS”), is a Washington limited liability company with its mailing address and principal place of business at 1312 N. Monroe, Suite 500, Spokane, Washington 99201. AMS transacts or has transacted business in this district and throughout the United States.

6. Defendant Rapid Reduction System’s, LLC (“Rapid Reduction”), is a Delaware limited liability company with its mailing address and principal place of business at 114 W. Pacific Ave., Suite 200, Spokane, Washington 99201. Rapid Reduction transacts or has transacted business in this district and throughout the United States.

7. Defendants AMS and Rapid Reduction have operated as a common enterprise while engaging in the unlawful acts and practices alleged below. AMS and Rapid Reduction have conducted the business practices described below and share common ownership, officers, business functions, materials, and website form and content. Because AMS and Rapid Reduction have operated as a common enterprise, each of them is jointly and severally liable for the acts and practices alleged below. Individual defendants Bishop and Rohlf have formulated, directed, controlled, had the authority to control, or participated in the acts and practices of AMS and Rapid Reduction that constitute the common enterprise.

8. Ryan David Bishop (“Bishop”) is an owner and member of AMS and Rapid Reduction. At times material to this Complaint, acting alone or in concert with others, he has formulated, directed, controlled, had the authority to control, or participated in the acts and practices set forth in this Complaint. Defendant Bishop is or has been a signatory on AMS bank accounts. He has initiated or authorized payments or wire transfers from these AMS accounts to persons or entities in apparent furtherance of the enterprise. He is or has been listed as a responsible party on the AMS telephone service account and as the contact on the AMS website registration. He resides in Spokane County, Washington, and, in connection with the matters alleged herein, transacts or has transacted business in this district and throughout the United States.

9. Michael L. Rohlf (“Rohlf”) is an owner and member of AMS and Rapid Reduction. At times material to this Complaint, acting alone or in concert with others, he has formulated, directed, controlled, had the authority to control, or participated in the acts and practices set forth in this Complaint. Defendant Rohlf signed a contract between AMS and PDMI as an owner of AMS, and is or has been a signatory on AMS bank accounts through which he has initiated or authorized payments or wire transfers to persons or entities in apparent furtherance of the enterprise. He is or has been listed as a responsible party on an AMS telephone service account. He resides in Spokane County, Washington, and, in connection with the matters alleged herein, transacts or has transacted business in this district and throughout the United States.

10. PDM International, Inc., also doing business as Priority Direct Marketing International, Inc. (“PDMI”), is a Delaware corporation with its mailing address and principal place of business at 2132 L Don Dodson Dr., Bedford, Texas 76021. PDMI transacts or has transacted business in this district and throughout the United States.

11. William D. Fithian (“Fithian”) is the sole owner and officer of PDMI. At times material to this Complaint, acting alone or in concert with others, he has formulated, directed, controlled, had the authority to control, or participated in the acts and practices set forth in this Complaint. Defendant Fithian signed a contract between AMS and PDMI as president of PDMI. He is or has been listed as the contact on the PDMI website registration and as the primary contact for a PDMI telephone service account. Fithian has also initiated or authorized the wiring of significant funds to AMS from a PDMI bank account. He resides in Tarrant County, Texas, and, in connection with the matters alleged herein, transacts or has transacted business in this district and throughout the United States.

DEFENDANTS’ BUSINESS PRACTICES

13. Since at least 2008, Defendants AMS, Bishop, and Rohlf have marketed a credit card interest rate reduction service to consumers nationwide and have provided fulfillment and customer service in connection with the credit card interest rate reduction service.

14. Since at least 2008, Defendants PDMI and Fithian have been telemarketers for AMS. They have marketed a credit card interest rate reduction service to consumers nationwide and have provided payment processing to allow for the collection of payments from consumers who purchase the credit card interest rate reduction service.

15. Since at least late 2009, Defendants Rapid Reduction, Bishop, and Rohlf have marketed a credit card interest rate reduction service to consumers nationwide and have provided customer service and fulfillment in connection with the marketing of the credit card interest rate reduction service.

16. In the course of marketing their credit card interest rate reduction service, Defendants have engaged in telemarketing by participating in a plan, program, or campaign conducted to induce the purchase of goods or services by use of one or more telephones and which involves more than one interstate telephone call.

17. In numerous instances, Defendants, or intermediaries acting on Defendants’ behalf, have initiated telephone calls that deliver prerecorded voice messages to induce consumers to purchase their credit card interest rate reduction service. These calls are known as “voice broadcasts” or “robocalls.”

18. In numerous instances, when consumers answer the telemarketing calls, Defendants, or intermediaries acting on behalf of Defendants, do not connect the call to a live sales representative, but play prerecorded messages that offer the opportunity to secure lower credit card interest rates before instructing the recipient of the telephone call to press a number on their phone to be connected to a live representative. Consumers who press that number are connected to live representatives of AMS or PDMI, who offer to sell their credit card interest rate reduction service.

19. To market their credit card interest rate reduction service, Defendants, or intermediaries acting on Defendants’ behalf, have also initiated telephone calls to consumers in which live representatives offer to sell the service.

20. Defendants have also marketed their credit card interest rate reduction service via the Internet on several websites, including http://pdmi.us, www.amsplanning.com, and www.rapidreductions.com.

21. In numerous instances, Defendants identify themselves during the telemarketing calls using the phrases “Card Services,” “Client Services,” “Financial Services,” or some similar generic phrase that does not identify the seller of the services by name.

22. In numerous instances, Defendants, or intermediaries acting on Defendants’ behalf, have initiated telephone calls to consumers to induce the sale of credit card interest rate reduction services and have failed to disclose truthfully, promptly, and in a clear and conspicuous manner to the person receiving the call the identity of the “seller” or person that would provide or arrange to provide the services promoted by the telemarketing call, that the purpose of the call is to sell goods or services, or the nature of the goods or services.

23. During the telemarketing calls, Defendants claim that they will substantially reduce consumers’ credit card interest rates. Defendants also often claim that their program will provide substantial savings to consumers, typically $2500 or more in a short time.

24. Defendants charge each consumer a fee that typically ranges from $499 to $1590 for their services, which Defendants require be paid by credit card. Defendants represent that the amount of the fee will be offset quickly by savings achieved through reduced credit card interest rates.

25. In numerous instances, Defendants guarantee that, if the consumer does not save the promised amount of $2500 or more in a short time, the consumer will receive a full refund of the costs of Defendants’ services.

26. In the final step of the transaction, Defendants record a part of a telephone conversation with the consumer in which the consumer verifies his or her name, address, and other billing details, including credit card information. Defendants typically place the entire charge on the consumer’s credit card immediately following the telemarketing call.

27. After the consumer’s credit card account is charged, Defendants mail a package to the consumer containing a contract and forms for the consumer to complete and return listing all of the consumer’s credit card account information. In numerous instances, the letterhead on these materials contains the name PDMI, AMS, Rapid Reduction, or some other entity name, but bears AMS’s Spokane, Washington, mailing address. The package instructs the consumer to return the completed contract and forms to the Spokane, Washington, address.

28. In numerous instances, after consumers complete and return the contract and the forms to the AMS address, consumers hear nothing more from Defendants, or Defendants inform consumers that they were not successful in lowering the consumers’ credit card interest rates. In other instances, Defendants schedule a three-way telephone call with the consumer and the customer service department of the consumer’s credit card issuer. In these instances, a representative typically asks the consumer to verbally authorize the representative to discuss the consumer’s credit card account with the credit card issuer’s customer service representative. Once the consumer provides the verbal authorization, the consumer is told to hang up. Sometimes, the consumer has remained on the line throughout the call. In numerous instances, either the Defendants tell the consumer that they were not able to lower the consumer’s credit card interest rate or the consumer hears the credit card company decline the request and the call ends.

29. Having failed to lower the consumer’s credit card interest rates, Defendants sometimes urge the consumer to apply for a credit card with a low introductory rate and, if approved, to transfer the balances from his or her high interest rate credit cards to the new low introductory rate card. This is not what consumers understood they were paying for, and over-extended consumers are not likely to be approved for a low rate card.

30. In numerous instances, in lieu of a credit card interest rate reduction, Defendants AMS, Rapid Reductions, Bishop, and Rohlf provide consumers with a payment acceleration plan, described as a “debt elimination plan,” showing how the consumer’s total interest payments will be lower if the consumer pays more than a minimum payment amount, and directing the payments so that the credit card with the highest interest rate will be paid off first. The payment acceleration plan does not reduce the consumer’s credit card interest rate and this generic advice concerning the effect of making higher payments or paying off higher interest debts first is not what consumers understood they were paying for.

31. In numerous instances, Defendants fail to provide consumers with the reduced credit card interest rates or the minimum $2500 in savings promised during the initial sales calls.

32. In numerous instances, consumers contact Defendants and seek refunds based on Defendants’ failure to deliver on the promises made to the consumers. In numerous instances, Defendants decline to refund the fee charged to consumers for purchasing their services, claiming that their payment acceleration plan shows how the promised savings could occur. In numerous instances, consumers file complaints with the Better Business Bureau (“BBB”), and the BBB forwards those complaints to AMS. AMS tells consumers, via the BBB, that the entity responsible for providing refunds is PDMI and refers consumers to PDMI. When PDMI does provide a refund, it typically retains a $199 “non-refundable” fee.

33. In connection with telemarketing their program, Defendants, directly or through their agents or intermediaries, have made numerous calls to telephone numbers on the National Do Not Call Registry (“Registry”).

34. In connection with telemarketing their service, Defendants, directly or through their agents or intermediaries, have initiated telephone calls to the telephone numbers of consumers who have previously stated that they do not wish to receive calls by or on behalf of Defendants.

35. In numerous instances, Defendants have initiated outbound telemarketing calls, including some on or after December 1, 2008, with prerecorded messages, that failed to disclose truthfully, promptly, and in a clear and conspicuous manner to the person receiving the call: the identity of the seller; that the purpose of the call is to sell goods or services; and the nature of the goods or services.

36. In the course of the telemarketing described above, since September 1, 2009, Defendants or intermediaries acting on behalf of Defendants have initiated numerous telephone calls that delivered prerecorded messages to induce the sale of goods or services when the persons to whom those telephone calls were made had not signed an express agreement, in writing, authorizing the seller to place those prerecorded calls. – Source

Sincerly,
Steve

You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.


Damon Day - Pro Debt Coach

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