FTC Files Complaint to Stop Alleged Credit Card Interest-rate Reduction Scam

The FTC recently filed a complaint in federal district court in Florida to stop an alleged credit card interest-rate reduction scam.  In its complaint, the FTC alleges that the operation deceived numerous consumers struggling with credit card debt.

The FTC charged that several entities and individuals engaged in a telemarketing scheme that has deceived financially distressed consumers across the United States by promoting bogus credit-card interest-rate-reduction services.  The FTC’s complaint alleges that certain of the defendants used illegal robocalls to contact consumers and pitch phony debt-relief services.  The defendants allegedly guaranteed that consumers would substantially and permanently lower their credit card interest rates, saving thousands of dollars in interest payments.  According to the complaint, however, the scheme allegedly was rarely, if ever, able to obtain the guaranteed results.  The FTC alleged that in certain cases, the defendants would obtain new credit cards for consumers with low introductory teaser rates.  However, the promotional rates on these cards were only temporary and the defendants failed to disclose that consumers were required to pay a fee to transfer their existing credit-card balances to the new cards.  The complaint alleges that certain defendants violated both the FTC Act and the Telemarketing Sales Rule (TSR) by misrepresenting that they could reduce credit card interest rates and save consumers money, and by failing to disclose that consumers could end up paying additional bank fees totaling one to three percent of their entire credit card debt.  The complaint also charged the defendants with additional TSR violations for collecting illegal up-front fees, calling consumers whose numbers are on the National Do Not Call Registry, making illegal robocalls, and failing to pay required fees to access the Do Not Call Registry.

Since filing its complaint, the FTC filed a motion for a temporary restraining order to stop the defendants’ alleged violations of the FTC Act and TSR pending resolution of the case.  The FTC is also seeking the appointment of a receiver to take control of the corporate defendants, an asset freeze to preserve funds for potential consumer redress, as well as limited, expedited discovery.  A hearing is expected on December 15, 2017.

A copy of the FTC’s complaint is available here.