FTC Shuts Down Another Credit Card Interest Rate Reduction Scheme

Case is Sixth Advance-Fee Telemarketing Complaint Filed in Just Over a Month

For the sixth time in just over a month, the Federal Trade Commission shut down a scheme, pending trial, that allegedly tricked consumers into paying hundreds of dollars based on bogus promises of lower credit card interest rates.

At the FTC’s request, a federal district court in Arizona has temporarily shut down the operation, known as National Card Monitor, LLC, which charged consumers up to $599 up-front to supposedly secure a new low-rate credit card on their behalf.

According to the FTC’s complaint, the defendants sought out consumers seeking relief from high credit card interest rates. In the scheme, telemarketers working for National cold-called consumers and told them the company could reduce their credit card interest rates to as low as zero percent by obtaining new lower-rate cards on their behalf, onto which they could transfer existing balances. Consumers who accepted the offer were required to pay an advance fee, typically ranging from $499 to $599. National also claimed it had a 100 percent money-back guarantee, and that consumers who did not get the promised cards would receive a full refund.

After paying the fee, however, most consumers found out that National failed to deliver on its promise to secure a new credit card on their behalf, and that getting a “guaranteed” refund of their payment was very difficult, the FTC alleged. The agency’s complaint also alleges National called consumers whose numbers are on the Do Not Call Registry and never paid the fees required to access registered phone numbers in the area codes its telemarketers call.

The FTC charged National with violating the FTC Act and the Telemarketing Sales Rule by misrepresenting or making unsubstantiated claims that consumers who bought its credit card interest rate reduction services would receive a new low-interest rate credit card and that it would provide full refunds to anyone who did not.  Other charges included calling consumers on the Do Not Call Registry, failing to pay Registry fees, and requesting or receiving an advance fee for a credit card via telemarketing.

Today’s case follows the November 1, 2012, announcement of an FTC-led joint enforcement effort against five companies that allegedly made deceptive “cardholder services” robocalls.  That announcement, which included cases brought by state partners in Arizona, Arkansas, and Florida, came just weeks after the FTC held a summit in Washington, DC, to examine the robocall problem and announced a $50,000 cash prize for the best technical solution to block illegal robocalls on landlines and mobile phones.

The Commission vote to issue the complaint was 5-0. It was filed in the U.S. District Court for the District of Arizona and names as defendants National Card Monitor LLC, also doing business as Nationwide Card Monitor, and James Eric Cox.

The FTC would like to thank the U.S. Postal Inspection Service; the Mesa, Arizona, Police Department; the Arizona Attorney General’s Office; and the Better Business Bureaus of Central, Northern, and Western Arizona for their help in bringing this case.

Information for Consumers

The FTC has information for consumers on advance-fee schemes.  One consumer alert provides information on how consumers can identify and protect themselves from such fraud, and a second explains what consumers should do if they get prerecorded telemarketing calls pitching advance-fee products.

If you want to reduce the interest rate you’re paying on your credit card purchases, your best bet is to handle it yourself for free: call the customer service phone number on the back of your credit card and ask for a reduced rate. Be calm, patient, and persistent. And if you are tempted by the promises in a rate reduction robocall, hold off — and hang up. Also:

• Don’t give out your credit card information.  Once a scammer has your data, they can charge your credit card for their own purchases or sell the information to other scammers.
• Don’t share other personal financial or sensitive information like your bank account or Social Security numbers.  Scam artists often ask for this information during an unsolicited sales pitch, and then use it to commit other frauds against you.
• Be skeptical of any unsolicited sales calls that are prerecorded, especially if your phone number is on the Do Not Call Registry.  You shouldn’t get recorded sales pitches unless you have specifically agreed to accept such calls, with a few exceptions.  See New Rules for Robocalls at ftc.gov/phonefraud.
• If your number is on the National Do Not Call Registry, a telemarketer may call you only if you have agreed to accept calls from the company the salesperson works for, if you have bought something from the company within the last 18 months, or if you have asked the company for information within the last three months.

To report violations of the National Do Not Call Registry or to register your phone number, visit DoNotCall.gov or call 1-888-382-1222.

NOTE:  The Commission files 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 complaints are not a finding or ruling that the defendants have actually violated the law.  The cases will be decided by the court.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics.  Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.