Companies Settle FTC Charges in Credit Card CaseTwo companies agreed to pay a total of $85,000 to settle federal charges that they used telemarketing to fraudulently offer credit card protection services to consumers, the Federal Trade Commission said yesterday.
Consumer Repair Services, based in Georgia, paid $43,000 to settle charges of making misrepresentations in its offer of credit card protection services. The second firm in the case, Nevada-based Manhattan West Marketing, which contracted to provide telemarketing and fulfillment services, agreed to pay $42,000 to settle charges of its involvement.
According to the FTC, from late 1999 to October 2000 telemarketing agents working for Consumer Repair Services told consumers that their credit card information was available on the Internet and could be used to place unauthorized charges. The company's agents also told consumers that their liability was not limited to $50, which is untrue, the FTC said.
Consumer Repair Services further misrepresented that it was affiliated with Visa and MasterCard and that consumers could be refunded their $295 fee for the service if they canceled within 30 days, the FTC said. The company did not provide refunds and in some cases charged consumers without their consent, according to the charges.
In addition to the payments, Consumer Repair Services and its operators agreed to a ban from marketing credit card protection services. Manhattan West Marketing agreed to a ban on all telemarketing activities.
The settlement also contains restrictions on the distribution of the companies' customer records and requirements to monitor sales personnel and maintain records.