The state of Arizona has reached a settlement with a Phoenix credit-card telemarketing operation that includes refunds to consumers and a $100,000 civil penalty, according to wire service reports.
The telemarketers claimed to sell low-interest credit cards, but in fact were selling a list of banks that provided credit cards. The cards were available only to those consumers who met a particular bank’s qualifications.
The companies involved were known as the Institute for Financial Advantage Inc., Select Research Institute, For Your Information, Airtime Communications, FYI Consulting Services, Inc., Fortune IV and Research America.
The complaint alleged that the defendants violated the state’s Consumer Fraud Act and Telephone Solicitations statute by leading consumers to believe that they could provide low-interest credit cards or directly assist them in obtaining low-interest credit cards, which would allow them to realize substantial savings on monthly credit card payments.
According to AG Terry Goddard, consumers paid hundreds of dollars and instead of receiving a credit card, they were sent a 92-page booklet that contained a list of banks that provided credit cards.
Under the consent judgment, the defendants:
* Admitted that they falsely led consumers to believe that they were pre-qualified to receive a low-interest credit card from their companies.
*Admitted they falsely told consumers that the savings realized through the use of the new credit card would cover the fee being charged for the service.
* Did not fully explain that, in order to receive a lower rate credit card, they were obligated to apply to and be approved by one of the banks on the list in the booklet.
In addition, the defendants must make refunds to all individuals who filed complaints with the Attorney General’s Office, the Better Business Bureau and/or the Federal Trade Commission. They will also pay to the State a $100,000 civil penalty.
The consent judgment also prohibits the defendants from engaging in any future deceptive acts and practices, and from operating any business, within the next five years, that charges a consumer’s credit card without first obtaining the consumer’s written authorization.
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