FTC Reaches Settlement With Two Nevada Companies Over Alleged Credit Card Scheme | Goodwin
On January 29, 2021, the FTC announced that it had filed a proposed settlement in the Nevada District with two Nevada-based consulting firms, resolving allegations that the companies violated the FTC Act, the Telemarketing Act. and Consumer Fraud and Abuse Prevention, Telemarketing Selling Rule, Credit Repair Agencies Act, and Consumer Review Fairness Act.
The FTC alleged that, since 2013, both companies have been charging consumers for obtaining “funding” to pay for training offered by a number of third-party companies with which the companies have partnered. The trainings consisted of seminars and coaching packages costing tens of thousands of dollars that were supposed to teach consumers how to make money by investing in real estate or running an online business. The FTC alleged that the third-party training companies referred consumers to the defendants, who in turn charged consumers a fee of $ 3,000 or more for submitting numerous personal credit card applications on their behalf. This process is known as “credit accumulation”. The defendants have reportedly attempted to secure at least $ 50,000 in total lines of credit with zero percent introductory interest rates for each consumer, on half a dozen or more credit cards. To achieve this, the FTC alleges that companies inflate consumers’ income on credit card applications up to $ 100,000. The companies also allegedly fraudulently told consumers that they should expect to make so much money after participating in the training programs. Finally, the FTC alleged that the companies then tricked consumers into maximizing credit cards to pay for the tuition of the training seminar.
Under the proposed settlement, the two Nevada companies would pay the FTC $ 2.1 million in monetary relief. Businesses would also be prohibited from selling consumer credit services and engaging in specific practices, such as distorting the financial position of any consumer. Businesses would also be prohibited from selling a consumer’s financial account information without their consent.
