FTC Cracks Down on Telemarketers Offering Credit Card Protection
The Federal Trade Commission, cracking down on the fraudulent marketing of credit card protection services, yesterday said it filed complaints against two companies and reached a settlement with a third company.According to the FTC, the companies misrepresented their identities to consumers during telemarketing calls, misled consumers by telling them that they were not protected against credit card fraud and in some cases posted unauthorized charges to consumers' credit card accounts. The companies reportedly claimed to represent either Visa or Mastercard when they called and said that consumers needed to purchase added credit card protection either because of an increase in credit card number theft or because of potential problems related to Y2K.
The companies also sometimes persuaded customers to divulge their credit card numbers over the phone, then charged them between $200 and $400 without their authorization, the FTC alleges.
The FTC charged Source One Publications Inc. and Liberty Direct Inc., both of Arizona, with violations of the FTC Act and the FTC's Telemarketing Sales Rule. The FTC also charged Credit Mart Financial Strategies Inc. of Montreal with violations of the FTC Act and the TSR and reached a stipulated consent decree with Credit Mart to settle the charges and provide $100,000 in consumer redress.
In addition, six state attorneys general filed complaints against companies allegedly involved in similar practices.
The FTC's Credit Card Protection Sweep also involves an educational campaign to educate consumers about their credit card rights.
