FTC Halts International Credit Card Scam

FTC Halts International Credit Card Scam

November 24, 2004

The Federal Trade Commission has charged a cross-border telemarketing enterprise with defrauding consumers out of millions of dollars by offering them a “guaranteed” low-interest credit card for an advance fee, then failing to come through on its promise. According to the FTC’s complaint, the defendants, operating boiler rooms in the United States, Canada, and India, targeted consumers with poor credit and used promises for credit cards to trick them into revealing their bank account information. On November 17, a U.S. district court in Chicago issued a temporary restraining order halting the defendants’ illegal activities, freezing their assets, and appointing a receiver to take over their operation.

The FTC’s complaint against 3R Bancorp states that, since at least May 2002, the defendants have called consumers across the United States and falsely claimed they would provide them with credit cards in exchange for an advance fee, typically at least $149. The defendants allegedly claim that consumers are pre-approved for an unsecured Visa or MasterCard with a low interest rate and a high credit limit, with no security deposit required regardless of the consumer’s credit history. The FTC alleges that the defendants use high-pressure sales tactics to coerce consumers into providing their checking account information. The defendants then allegedly debit consumers’ accounts and fail to provide the promised credit card. In papers filed with the court, the FTC alleges that the defendants are unresponsive to consumers’ refund requests and that consumers seeking refunds rarely receive them.

The FTC’s complaint also alleges that the defendants have called consumers whose telephone numbers are registered on the National Do Not Call Registry and failed to pay the required annual fee to access the registered telephone numbers.

The FTC charges that the defendants have violated the FTC Act by falsely claiming that consumers would receive an unsecured credit card, then collecting money from consumers without providing the promised card. The FTC’s complaint also alleges that the defendants violated the Telemarketing Sales Rule by making false claims via telemarketing and by calling consumers whose numbers are registered on the National Do Not Call Registry. The FTC has asked the court to bar permanently the defendants’ illegal business practices and award consumer redress.

The FTC’s complaint names: 3R Bancorp; 3R E-Solutions, Inc., d/b/a CR Bancorp, Euro Banca, 3R Companies, 3R Ventures, 3R Contact Centers, 3R Solutions, 3RE E-Solutions, R 3R E-Solutions, E3R E-Solutions, and E 3R Capital Solutions; 3R E-Solutions Corporation; National United Properties, LLC, d/b/a Awfmex Management Company; 3R Real Estate Corporation, d/b/a Fairview, Inc.; E Three R Info Systems Pvt. Ltd; Ranbir Sahni; John Perton; Oliver McKinney; Brian Murphy; and Kirt Charter as defendants.

The FTC brought this matter with assistance from the members of the Toronto Strategic Partnership, a cross-border fraud law enforcement effort that includes, in addition to the FTC, Competition Bureau Canada, the Ontario Provincial Police Anti-Rackets, the Toronto Police Service Fraud Squad, the Ontario Ministry of Consumer and Business Services, and the United States Postal Inspection Service.

The FTC also received valuable assistance in this matter from the U.S. Attorney’s Office in the Central District of California, and Federal Bureau of Investigation, the U.S. Marshals Service, and the Long Beach, California Police Department.

FTC Press Release

Cross-Border Advance-Fee Credit Card Operation Settles FTC Charges

May 24, 2006

Defendants Will Pay $1.85 Million in Consumer Redress

A cross-border telemarketing enterprise has agreed to settle Federal Trade Commission charges that their business tactics violated the FTC Act and the FTC’s Telemarketing Sales Rule (TSR). Under the settlement, they will pay full redress to consumers, totaling $1.85 million, and stop their illegal practices, including falsely promising consumers a “guaranteed” low-interest credit card for an advance fee, calling people whose telephone numbers are registered on the National Do Not Call (DNC) Registry, and failing to pay the required annual fee to access DNC-listed numbers.

The settlement follows an FTC complaint filed in November, 2004, when a federal court issued a temporary restraining order halting the defendants’ illegal activities, freezing their assets, and appointing a receiver to take over their operation. The FTC alleged that 3R Bancorp and its co-defendants operated boiler rooms in the United States, Canada, and India that targeted consumers with poor credit, falsely claiming they were pre-approved for a credit card with a low interest rate and a high credit limit, with no security deposit required regardless of their credit history. As alleged in the FTC’s complaint, the defendants collected substantial up-front fees from consumers but never delivered the promised credit cards.

Under the settlement, defendant Ranbir Sahni and his “3R” companies are permanently banned from marketing or selling any credit-related products, programs, or services. All the settling defendants are permanently prohibited from making misrepresentations about any products or services, and from violating the TSR. Defendants covered by the settlement are 3R Bancorp, 3R e-Solutions, Inc.; 3R E-Solutions Corporation; National United Properties, LLC; 3R Real Estate Corporation; E Three R Info Systems Pvt. Ltd.; Ranbir Sahni; and John Perton.

Many of the telemarketing calls in this case originated from the defendants’ call centers in Canada and India. The FTC received substantial assistance from the Toronto Strategic Partnership, a cross-border fraud law enforcement partnership which, in addition to the FTC, includes the Competition Bureau Canada, the Toronto Police Service – Fraud Squad, the United States Postal Inspection Service, the Ontario Ministry of Government Services, the Ontario Provincial Police – Anti-Rackets, the Royal Canadian Mounted Police, and the United Kingdom’s Office of Fair Trading.

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What Consumers Should Know

• Legitimate offers of credit do not require an up-front payment. Although legitimate lenders may charge application, appraisal, or credit report fees, the fees generally are taken from the amount borrowed. Here are some tips from U.S. and Canadian law enforcers on how consumers can avoid being taken by advance-fee scams:
• Don’t pay for the promise of a loan. It’s illegal for companies doing business by phone in the U.S. to promise you a loan and ask you to pay for it before they deliver. Requiring advance fees for loans also is illegal in Canada. 

• Ignore any ad – or hang up on any caller – that guarantees a loan in exchange for a fee in advance.
• Remember that legitimate lenders never guarantee or say that you will receive a loan before you apply, or before they have checked out your credit status or contacted your references, especially if you have bad credit or no credit record.
• Don’t give your credit card, bank account, or Social Security number on the telephone, by fax, or via the Internet unless you are familiar with the company and know why the information is necessary.
• Don’t make a payment to an individual for a loan; no legitimate lending organization would make such a request.
• Don’t wire money or send money orders for a loan through Western Union or similar companies. You have little recourse if there’s a problem with a wire transaction. Legitimate lenders don’t pressure you to wire funds.
• If you are not absolutely sure who you are dealing with, get the company’s number in thephone book or from directory assistance, and call it to make sure you’re dealing with the company you think you are. Some scam artists have pretended to be the Better Business Bureau or another legitimate organization.

FTC Press Release

Complaint
Temporary Restraining Order
Stipulated Final Judgement and Order