Canadian Boilerroom Charged
With Credit Card Scams

WASHINGTON, April 9, 2002 -- Consumer Alliance, an operation based in Ontario, Canada, has been charged with deceptively marketing worthless credit-card protection programs to U.S. consumers.

The Federal Trade Commission also alleges that the defendants telephoned consumers and offered low interest credit cards, but never provided consumers with a credit card. According to the FTC, the defendants also placed unauthorized charges on the credit cards of many U.S. consumers.

The Commission is asking the court to issue an injunction permanently halting the deceptive claims and requiring that the defendants pay consumer redress.

According to the FTC, the defendants used Canadian boilerrooms to offer credit card protection to U.S. consumers. During the sales pitch, the defendants' telemarketers allegedly misled consumers by saying that:

• the telemarketers were affiliated with, or calling from, Visa, MasterCard, or on behalf of the consumers' credit card issuers;
• consumers could be held fully liable for any unauthorized charges made on their credit cards if they did not purchase this protection; and
• consumers would only have to pay a small fee for the service - typically $2.99 or $3.49 - instead of the $299 to $349 the defendants actually charged.

The complaint alleges that the defendants purposely misrepresented their affiliation with a credit card issuer, and tricked consumers into divulging their credit card numbers by stating that they already knew the numbers but needed verification, and then used the information to bill the consumer's credit card without authorization.

In addition, the complaint alleges that in other calls the defendants' telemarketers promised U.S. consumers a credit card with a low interest rate, or a low interest rate on the consumers' existing credit card, in exchange for a $349 or $399 fee. In fact, according to the FTC, those consumers only received a list of banks to which they could apply for credit cards.

The FTC's complaint alleges that the defendants violated Section 5 of the FTC Act and the Telemarketing Sales Rule (TSR) by, among other things, misrepresenting the cost of their programs and billing consumers without authorization.

The FTC's complaint names three corporations -- Consumer Alliance, Inc., a Delaware corporation; Consumer Alliance, Inc., [also known as 1421914 Ontario Inc.], a Canadian corporation; and Biosource Financial, Inc. Also named are several officers and employees.

The Commission investigated this case in conjunction with the Ontario Provincial Police, Anti-Rackets Section, which has filed criminal charges against some of the defendants.

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