Debt-reduction phone solicitations often are scams
BY PHIL MULKINS World Action Line Editor
Wednesday, December 26, 2012
12/31/12 at 1:49 PM
At the Federal Trade Commission, "Rachel from Cardholder Services" is "public enemy No. 1," says FTC Chairman Jon Leibowitz, referring to a recent agency crackdown on five major telemarketing/robocalling firms in Florida and Arizona.
"We're cracking down on illegal robocalls by bringing law enforcement actions and pursuing technical solutions to the problem," he said. See tulsaworld.com/FTCRobocallRoundup
The FTC announced Nov. 1 that complaints were filed against Treasure Your Success, Ambrosia Web Design, A+ Financial Center LLC, Green Savers and Key One Solutions LLC.
The complaints allege the defendants violated the FTC Act by falsely telling consumers that they "will have their credit card interest rates reduced substantially and will save thousands of dollars as a result of lowered credit card interest rates."
Four of the five complaints said the defendants violated the FTC Act by "claiming consumers who buy their services will be able to pay off their debts much faster as a result of lowered credit card interest rates and making false claims about their refund policies."
The FTC receives 200,000 complaints monthly about telemarketing robocalls, including calls from "Rachel" who pitches consumers with "an easy way to save money by reducing credit card interest rates."
After collecting up-front fees, the FTC says the companies do little - if anything - to fulfill their promises. At its recent Robocall Summit, the FTC issued the "Robocall Challenge" ( tulsaworld.com/FTCRobocallChallenge) by offering a $50,000 prize for the best technical solution to block robocalls on landlines and mobile phones.
In the robocall cases, the FTC alleges the defendants placed automated calls to consumers, typically with a prerecorded message from "Rachel" or someone else from "Cardholder Services." The calls purport to have an "important message" regarding an opportunity to reduce high credit card interest rates. Consumers are urged to "press 1" to connect with a live representative, or "press 2" to discontinue getting such calls. Consumers who press any number confirm to the system that the autodialer has reached a functioning, assigned telephone number.
Consumers have no way to screen the calls using Caller ID because the incoming number is often "spoofed," or displayed as a false number. In many cases, the name displayed on the Caller ID is so generic - "Card Services," etc. - that it provides less information than is necessary to find the person calling.
The FTC warns that when consumers reach live telemarketers, they are pitched deceptive offers for credit card interest rate reduction, sometimes to as low as 6.9 percent or even zero percent. Telemarketers guarantee that lowering card interest rates will save consumers thousands of dollars in finance charges in a short time, allowing them to pay off balances quickly. After consumers have been "approved" for the program, telemarketers inform them that there is an up-front fee, ranging from several hundred dollars to $3,000.
Telemarketing Sales Rule broken by 5 firms, FTC says
The Federal Trade Commission complaints announced Nov. 1 also charge five defendants with multiple violations of the Telemarketing Sales Rule for misrepresenting their services, calling numbers on the Do Not Call Registry and collecting up-front fees.
The rule ( tulsaworld.com/FTCTeleSalesRule) also specifically prohibits charging or receiving fees in advance of providing debt relief services and misrepresenting the terms and conditions of debt relief services.
Finally, the complaints charge that the defendants are responsible for making illegal robocalls, in violation of the TSR.
Nearly all pre-recorded telemarketing calls have been prohibited since Sept. 1, 2009.
In the FTC's experience, companies such as these often hire others to make calls on their behalf. The FTC alleges in each case that the defendants themselves are legally responsible for making the robocalls.
Also, "debt relief service" is one of 27 disallowed business practices that the Better Business Bureau system will not consider for BBB accreditation. "Debt relief" is right up there with "credit repair services," "credit-debt consolidation services" and "spiritualists."
The Council of Better Business Bureaus' 2005 fact sheet, "Looking for debt relief? BBBTips" ( tulsaworld.com/BBBDebtRelief) offers consumers advice on choosing a credit counseling agency and warns against "debt relief."
"Consumers who owe a lot of money and find it difficult to pay their bills can be vulnerable to misleading ads that promise quick, cheap or easy fixes. They end up with dashed dreams and more deeply in debt," said Ken Hunter, president and CEO of the Council of Better Business Bureaus.
"The goal of our newest BBBTips is to encourage those needing credit counseling to spend time researching their options," he said. "Consumers should take care to select a reputable agency that offers budget and credit education opportunities, as well as trained counselors who can develop practical, personalized plans to improve their financial situations."
See the Oct. 24 Consumer Page ( tulsaworld.com/Consumer102412) that points out the across-the-board agreement on the danger that debt-settlement schemes pose.
The BBB designates debt settlement an "inherently problematic business." The New York City Department of Consumer Affairs calls it "the single greatest consumer fraud of the year."
The U.S. Government Accountability Office, the FTC, attorneys general from 41 states, consumer and legal services entities, and consumer bankruptcy attorneys all report substantial evidence of its abuses.
Original Print Headline: Calls offering debt reduction often are scams
Tulsa World consumer writer Phil Mulkins wants to know which topics interest you. Call 918-699-8888, email your suggestion to phil.mulkins@tulsaworld.com or mail it to Tulsa World Consumer, PO Box 1770, Tulsa, OK 74102-1770.
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Illustration by JASON POWERS / Tulsa World
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