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Feds Stop Credit Card Rate Reduction Scam

February 2, 2007
At the request of the Federal Trade Commission, a federal court has stopped a Canadian telemarketer that targeted consumers throughout the U.S., falsely claiming it could reduce their credit card interest rates.

According to a complaint filed by the FTC, the defendants have sold credit card interest rate reduction services since December 2005, claiming to be affiliated with consumers' credit card companies.

The complaint alleges that the defendants promise to have credit card rates reduced to between 4.75 percent and 9 percent, thus saving consumers at least $2,500, and that if consumers do not save that amount their money will be refunded.

The complaint also alleges that the defendants engaged in Caller ID spoofing, causing consumers' caller identification services to display telephone numbers that do not belong to the defendants, but rather to innocent victims whose telephone numbers are misappropriated.

For $675 plus $20 for shipping and handling, the complaint alleges, the defendants send consumers promotional materials with more promises to substantially reduce their interest rates, and a "financial profile form" for consumers to complete and mail back. The form asks consumers to list the current balance, credit limit, interest rate, and suggested minimum payment for each of their credit card and other debts, as well as their social security number and other personal information.

After receiving the completed form, the defendants initiate three-way telephone calls with consumers and their credit card companies and ask the companies to lower the consumers' credit card interest rates. The requests typically are denied, and that is often the extent of the defendants' services.

The complaint also alleges that the defendants do not honor their policy of giving refunds to consumers who do not experience the promised substantial savings.

The FTC charged the defendants with violating Section 5 of the FTC Act and the FTC's Telemarketing Sales Rule (TSR).

On January 29, 2007, a federal judge issued an ex parte temporary restraining order prohibiting further violations by, and freezing the assets of, defendants Select Personnel Management Inc., based in Ontario, Canada, and doing business as Select Management Solutions, and its director, James Stewart.

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