Healthcare Discount Plans Settle FTC Charges

Share this article:

Canadian telemarketers have settled Federal Trade Commission charges that they fraudulently marketed and sold credit card loss protection and healthcare discount plans to U.S. consumers in violation of federal law.

Their telemarketing boiler rooms have been shut down, and they will pay $200,000, the FTC said yesterday.

According to the FTC's complaint, six Toronto-based individuals and their companies targeted U.S. consumers, telling them that their company was affiliated with credit card issuers or banks and that consumers needed to buy "credit card loss protection" in order to avoid being held fully liable for unauthorized charges on their credit cards. In reality, under federal law consumers cannot be held liable for more than $50 of unauthorized charges on their cards - consumers do not need to pay for this protection.

Operating as "National Credit Card Security," the defendants charged consumers $249, often without authorization.

When consumers paid, the only things they received were "anti-fraud" stickers to put on their credit cards, and forms they were supposed to fill out and return to the defendants, listing all of their account numbers.

The defendants' second scheme, as described in the FTC's complaint, targeted elderly U.S. consumers with promises of large discounts on prescription drugs and medical services. The telemarketers used a variety of deceptive tactics to get consumers' money. They led them to believe they were calling from insurance companies or government agencies. They persuaded consumers to divulge their credit card or bank account numbers by stating that they already knew the numbers but needed to "verify" them. They misrepresented that consumers would receive a free trial period before being charged the $349 enrollment fee. They also charged many consumers without authorization and ignored most requests for refunds.

The Canadians operated this scheme under a series of different names, including "Med Plan," "Global Discount Healthcare," and "MDI." The defendants will pay $200,000 in consumer redress as part of the settlement.

The order contains a judgment of $14 million, which is suspended based on the defendants' inability to pay. If the court finds they misrepresented their financial status, they will be liable for the full amount. The settlement bars the defendants from making any misrepresentations about goods or services in the future. It also bars them from violating the Telemarketing Sales Rule.

Share this article:
You must be a registered member of Direct Marketing News to post a comment.

Sign up to our newsletters

Follow us on Twitter @dmnews

Latest Jobs: