The Federal Trade Commission has settled charges with two operators of an allegedly fraudulent credit card scheme and their companies.
Robert Barr and Candace Rodriguez, principals of Westcal Equipment, doing business as Pioneer First and PF Member Services, Inc., have agreed to settle federal charges that they engaged in fraudulent business practices.
The settlement prohibits the defendants from:
*Misrepresenting that, after paying a fee, consumers will or are highly likely to receive an unsecured major credit card.
*Failing to disclose clearly and prominently in all promotional materials and on the Pioneer Web site that the Pioneer First Platinum card can only be used to purchase merchandise through Pioneer First and that a down payment is required in order to receive a credit card.
*Requesting or receiving a fee when they have guaranteed or represented a high likelihood of success in obtaining a loan or other extension of credit.
*Failing to obtain verifiable authorization to debit a consumer’s bank account.
The order does not fine the defendants but will require them to pay $1 million if they are found to have lied on their financial disclosure forms.
The complaint–which grew out of a joint FTC/Washington state investigation–alleged that the defendants advertised nationally on cable TV for their Pioneer First Platinum credit card, implying that it was a major credit card. According to the FTC, the defendants guaranteed a Pioneer First Platinum credit card with a $5,000 credit limit and 0% interest for 12 months to anyone who was a legal U.S. resident, at least 18 years old, and had a checking account.
According to the FTC, when consumers responded to the ads, the defendants allegedly told them they had to pay an advance fee of $189 to receive the card. According to the FTC, the Pioneer First Platinum credit card was not a major credit card, but a catalog card good only for buying merchandise through Pioneer First’s Web site and catalog.
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