A U.S. district court has frozen the assets of a telemarketing operation that allegedly charged consumers hundreds of dollars based on bogus promises to either provide them with low-interest credit or refund their money. The court also has ordered the illegal conduct to stop while the Federal Trade Commission (FTC) moves forward with the case.
The FTC alleged in its complaint that Eric C. Synstad and the Phoenix, Arizona-area company he controls, Premier Nationwide Corporation, falsely promised they would provide refunds if they could not significantly reduce consumers’ debt. The defendants allegedly claimed they would either secure a new, low-interest credit card or reduce the interest rates on current credit cards.
The defendants violated both the Federal Trade Commission Act and the Telemarketing Sales Rule, according to the complaint. Changes made to the Rule in 2010 prohibit companies that sell debt relief services over the telephone from charging fees before achieving the promised results.
Cold-calling consumers, the defendants allegedly said they would consolidate debts on a new credit card with an interest rate as low as 9 percent, or work with a consumer’s existing credit card issuers to lower monthly payments and interest rates – in exchange for an up-front fee that typically ranged from $149 to $599.
The defendants claimed the fee would quickly be offset by the savings achieved from services they provided, and promised that if they could not significantly reduce consumers’ debt, they would provide full refunds, minus a 20 percent “processing fee,” according to the complaint.
The FTC alleges that in contrast to what the defendants promised, consumers who signed up for the credit card debt consolidation service were merely given a list of banks and told to apply for low-interest credit cards on their own.
Those who signed up for the interest rate reduction were told they would have to pay an additional monthly fee to a different company that would work to obtain reduced monthly payments and interest rates. Also, in numerous cases, consumers who sought the promised refund were denied.
Consumers looking for help with credit card debt should be wary of anyone who tells them to stop paying their bills, to pay someone other than their creditors, or to stop talking to their creditors. Consumers should also be careful about paying for financial assistance before they receive it
