Fraudulent telemarketers constantly prey on consumers seeking personal credit or finance-related assistance, according to the Federal Trade Commission and 15 state and federal law enforcers, who today announced "Operation No-Credit" - a joint law enforcement campaign targeting a wide range of credit-related frauds. The FTC and other law enforcement entities filed 43 actions as part of this campaign. Operation No-Credit highlights the efforts of the FTC and other law enforcement entities to halt some of the financial frauds occurring throughout the nation. The cases in this telemarketing sweep encompass a variety of financial frauds that impact consumers' credit, including typical advance fee credit card, credit repair, pay day loan, debt adjustment, and debt negotiation schemes, as well as new credit identity scams. The FTC has filed a series of federal court complaints alleging violations of law in the following areas:
Seven separate enterprises offer consumers "major credit cards," such as a MasterCard or Visa, or a loan, for a one-time advance fee, that never produce the promised credit cards or loans.
A California firm calling itself a "debt negotiation" company promises financially strapped consumers that it could reduce their debt and restore their credit by negotiating with creditors. But the company does little other than charge exorbitant fees while consumers stop making required payments to their creditors and plunge deeper and deeper into financial ruin.
An Oregon firm calling itself a "financial finder and matching service," offers to match consumers to charitable foundations that are most likely to give cash grants - which, unlike loans, never need to be repaid - to individuals who have "genuine reasons for needing the money," regardless of credit history or collateral. But what consumers receive is a useless list of foundations and general instructions on applying for a grant.
"In these uncertain economic times, finance-related scams are especially outrageous because they prey on the most vulnerable consumers - those out of work, those with poor credit ratings, or those who need money right away for emergencies," said J. Howard Beales, III, Director of the FTC's Bureau of Consumer Protection. "Working with our federal, state, and local partners, we are stopping scam artists who make false promises with no intention of delivering the goods. Our warning to these disreputable businesses is: we will track you down and stop your illegal practices."
Many of the cases highlighted today involve extensive cooperation among federal, state, and local law enforcement agencies. These actions include lawsuits, cease and desist orders, consent agreements, and even criminal indictments. (See attached chart.)
According to the FTC, advance-fee credit schemes continue to be among the most commonly-reported complaints in the Consumer Sentinel database that the FTC maintains and that hundreds of law enforcement agencies use. In advance-fee credit card scams, the perpetrators tell consumers that for an advance fee - sometimes several hundred dollars - they will receive an unsecured credit card. Frequently, the consumers get nothing of value. Other times they only receive a list of banks or a booklet of tips on how to obtain a credit card. In no case did the defendants issue a major credit card to a consumer.
(See list of cases and contacts.)
The FTC filed its actions under Operation No-Credit against:
Jubilee Financial Services, Inc., of Downey, California; company president, John E. Gustavsen; Jabez Financial Group, Inc., and its president, Curtis Cobb.
(The FTC staff received invaluable assistance on this case from the Better Business Bureau of the Southland (Southern California) and the National Foundation for Credit Counseling.)
Grant Search, Inc., of Ashland, Oregon; Steven G. Levine and Scott Stettnichs; Grant Pac, Inc., and Sunday R. Levine.
(The FTC staff received invaluable assistance on this case from the Council on Foundations in Washington, D.C., the Western Washington/Oregon Better Business Bureau, and the Oregon Department of Justice.)
Bay Area Business Council, Inc.; Bay Area Business Council Customer Service Corp.; America Leisure Card Corp., of Largo, Florida; Peter J. Porcelli, II; Christopher Tomasulo; and Bonnie A. Harris.
(The FTC staff received invaluable assistance on this case from the Sunrise Police Department.)
Brent Shivers, doing business as Credit Card Services and Destyni Enterprises, of Dallas, Texas.
1st Beneficial Credit Services LLC., doing business as First Beneficial Credit Services; First Beneficial Credit Services, Inc.; and American Capitol, of Toronto, Canada; and Viktor Golub, doing business as Platinum Express.
(The FTC staff received invaluable assistance on this case from the Delaware Better Business Bureau; Delaware Attorney General's Office - Consumer Protection Unit; Tennessee Regulatory Authority; Phonebusters - Ontario Provincial Police; Industry Canada; USPIS - Postal Inspectors in Albany and Buffalo; and Ontario Ministry of Consumer and Business Services.)
Premier Financial Services International, Inc., of Coral Springs, Florida; Premier Financial Services of Tennessee, Inc., of Nashville; First Financial Debt Consolidation Inc., of Oakland Park, Florida; and Scott Jason Kaduk.
(Complaint filed in the U.S. District Court for the Southern District of Florida, in Miami, on August 13, 2002. Civil Action No. 02-CIV-61134 Moore; FTC File No. 022 3151.)
(The FTC staff received invaluable assistance on this case from the Coral Springs, Florida Police Department, and the U.S. Postal Inspection Service - Tampa and Nashville.)
Westcal Equipment, Inc., doing business as Pioneer First; PF Member Services., Inc., of Buffdale, Utah; Robert Barr, Candace Rodriguez, Charles Schmidt, and Wayne Wrath.
(The State of Washington is a co-plaintiff in this matter. The FTC staff and the State of Washington received invaluable assistance on this case from the Utah State Bureau of Investigations; the Utah Department of Commerce, Consumer Protection Division; the Nevada Office of the Attorney General; and the Las Vegas Office of the FBI.)
Star Credit Services Inc. and James Shovak, of Holbrook, New York.
Tyme Lock 2000, Inc., of Nevada, doing business as United Family Services and USA Membership Services; Total Resources, Inc.; Ruth R. Adams, and Stella L. Aguilar.
The FTC alleges that the defendants in all nine of the cases listed above engaged in deceptive practices in violation of the FTC Act and the Telemarketing Sales Rule (TSR). In each case, the FTC is seeking permanent orders prohibiting the defendants from engaging in similarly deceptive finance-related schemes, and is asking the courts to freeze the defendants' assets. Where appropriate, the FTC is also seeking the appointment a receiver.
The FTC also is launching an extensive consumer education campaign, including a Spanish language component, to help consumers avoid credit-related fraud. The FTC has several consumer publications: Advance-Fee Loan Scams Campaign, Knee Deep in Debt, Credit Repair: Getting Back in the Black Campaign; and Payday Loans. They are available on the Internet at http://www.ftc.gov/bcp/conline . Publications can also be obtained in Spanish at www.ftc.gov/spanish
The Commission votes to authorize the staff to file the complaints in the appropriate federal district court were 5-0
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 complaint is not a finding or ruling that the defendant has actually violated the law. The case will be decided by the court.
Copies of the complaints are available from the FTC's Web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint, or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at http://www.ftc.gov. The FTC enters Internet, telemarketing, identity theft and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.