According to the FTC, the companies misrepresented their identities to consumers while telemarketing their "services," misled consumers by telling them that they were not currently protected against credit card fraud, and claimed that if the consumers did not purchase their services they could be held fully liable for all unauthorized charges made with their cards. Finally, two of the companies posted unauthorized charges to consumers' credit card accounts.

"Under federal law, the maximum amount for which a consumer can be held liable for charges they didn't authorize is $50," Jodie Bernstein, Director of the FTC's Bureau of Consumer Protection said.

"These companies took advantage of students, seniors, and others scared into thinking they were vulnerable. The consumers were misled by telemarketers, spent their hard-earned money and got nothing in return."

Also as part of the sweep announced today, the FTC implemented a major consumer education campaign designed to alert consumers of their credit card rights. This campaign includes the distribution of a Consumer Alert fact sheet that provides important information on credit card loss protection offers, along with a brochure and bookmark with information on fair credit billing and a cooperative effort with the AARP, which plans to make credit card loss protection its primary education effort for the month of September. 

In addition, in an attempt to reach out to college students who may be receiving their first exposure to credit cards, the FTC is currently working with the National Association of College Stores (NACS) to distribute over one million of the Credit Rules bookmarks along with students' book purchases. 

According to the FTC complaints, the companies used telemarketers to contact consumers offering what they claimed was credit card protection against loss, theft or Y2K-related problems. To avoid the perception that the company was making "cold calls," the telemarketers allegedly told consumers that they were calling from Visa or Mastercard, depending on which credit card the consumer had. 

They then said that criminals have been stealing credit card numbers via the Internet or other technology, and that consumers need additional protection because they are not currently covered against unauthorized use. 

The complaints allege that the companies claimed that the service they were providing would protect consumers from liability due to unauthorized credit card charges. 

Finally, in other instances, the telemarketers claimed that because of the Y2K computer bug, consumers would be exposed to credit card fraud, which could be prevented by purchasing similar protection services. In fact, federal law limits loss due to unauthorized credit card charges to $50 (a fee that is sometimes waived by the credit card company).

Further, the complaints allege that the telemarketers persuaded consumers to divulge their complete credit card numbers by reciting parts of their credit card numbers and requesting the remainder or by claiming to be verifying the consumers' identification or to be changing "security codes" on the consumers' credit cards. Using the credit card numbers, the complaints allege, the companies caused charges to be posted on the consumers' credit card bills without their consent or charged consumers fees ranging from approximately $200 to $400 for protection "services" that did not exist.

The FTC filed its actions in its Credit Card Protection Sweep against:

Source One Publications, Inc., an Arizona corporation; and Courtney Wiggs, individually and as an officer of Source One Publications, Inc. For alleged violations of the Federal Trade Commission Act (FTC Act) and the FTC's Telemarketing Sales Rule (TSR), the Commission is seeking to obtain a preliminary injunction, permanent injunctive relief, consumer redress recission or reformation of contracts, and other equitable relief; 

Liberty Direct, Inc., and The Ascendix Group, Inc., Arizona corporations; and Paul L. Wiggs and David C. Furnia, individually and as officers of Liberty Direct, Inc. and The Ascendix Group, Inc. For alleged violations of the FTC Act and the TSR, the Commission is seeking to obtain permanent injunctive relief, consumer redress, recission or reformation of contracts, and other equitable relief; and 

Credit Mart Financial Strategies, Inc., and Maurice Verrelli, individually and as an officer of Credit Mart Financial Strategies, Inc. for alleged violations of the FTC Act and the TSR. In this matter, a stipulated consent decree has been reached that will provide for settlement of the Commission's charges, injunctive relief and the payment of $100,000 in consumer redress by the defendants.