While junk e-mail keeps us busy hitting the delete button, unsolicited advertisements and offers through old-fashioned "snail mail" can also sow the seeds of confusion.
Not many companies do this better than a Nevada-based credit offer called First National Card.
First National Card -- offered by both Consumer Credit Services, Inc. (CCS) and Capital Credit Alliance, Inc. (CCA) -- is one of the most confusing and complained-about credit offers anywhere.
Both companies -- CCS and CCA -- reside in the same Las Vegas office building and offer the same products but are owned by two different people. They generate numerous consumer complaints annually to consumer protection agencies, Web sites and just about anyone else willing to listen.
Despite the volume of complaints, both companies have largely steered clear of trouble with the law.
CCS had a spot of legal trouble in 1998, when the Federal Trade Commission charged that CCS defrauded consumers nationwide through the deceptive telemarketing of credit cards and lines of credit for an up-front fee. The company settled the complaint by agreeing to clean up its act.
In 2006, the New York State Consumer Protection Board warned consumers to read the fine print in the CCS and CCA marketing offers.
What it is
So what exactly is First National Card? Most consumers assume it's a credit card, which is hardly surprising since that's what it looks like.
Most of the offers that come in the mail begin with, URGENT-APPROVED, Your Card Has Arrived Call Immediately To Activate This Card. It goes on to say that youre approved for a $6500.00 credit limit.
Many consumers stop reading at the point where the offer says $6500.00 credit limit, even though there is page after page of further information.
But keep reading and you'll find that it's not a general-purpose credit card that you can use anywhere but rather an advance-fee credit offer that can only be used to order items from a catalog provided by CCA/CCS.
Youll also see that if you activate by phone, you must provide banking information and youll have an 8 to 14-day "trial period" before your bank account is hit for $199.99.
Additionally, activating by phone will enroll you in a 30-day trial of two great programs" that will cost $99.99 each if you dont cancel in time. Oh, and don't forget to tack on a $198.00 annual fee and a $29.99 rush processing fee.
That adds up to $627.96 -- pretty expensive considering it gets you just about nothing of indisputable value.
Unfortunately, many consumers -- perhaps short of cash and starved for credit -- don't read the offer carefully and have no idea how much they'll be paying upfront for something that may not help them.
A typical complaint goes something like this: I just got this card in the mail and when I called to activate they said I needed to give them my checking account info. This is a scam!
Other complaints say, I thought it was a credit card, or I believed this was a Visa, so Im gonna sue them!
Unfortunately, it doesnt matter what any of us thought or believed. The only thing that matters is what the offer says. In the case of CCA, the front page says: Since your new card is not a general credit card and is authorized for CCA catalog purchases exclusively...
Tellingly, there is no MasterCard or Visa logo anywhere in the offer.
One of the benefits that consumers see in the First National Card offer is the phrase Credit Establishment plastered on the front of the envelope. Many people with bad credit see the offer as a way to re-establish their credit record, and then are surprised when the membership doesnt do that.
Once again, the wording on the offer -- for those willing to dig through the verbiage -- is quite explicit: You may establish, re-establish or build your credit with CCA exclusively and this may or may not affect your credit with others.
In other words, giving CCA your money will improve your credit with CCA. But since CCA isn't require to report your payment to the major credit reporting companies, it's not likely to have any effect on your overall credit rating.
Offers to minors
Another area of consumer consternation is the mailing of CCA and CCS offers to children.
Cathy, of Cadillac, Michigan, complained that her minor child received the offer. I received a pre-approved card in my 12-year-old sons name with a $6,500 limit! The only number given is an activation number, Cathy said.
This card was sent to my address in my daughter's name with a credit limit of $6,500.00. My daughter is an 8-year-old child! said Nancy, of Palm Bay, Florida. Apparently, information was filled out on a pop-up advertisement.
Were sorry that minors receive these offers, said Kenitra Williams, complaint specialist for First National Card. We dont want minors to receive it because you have to be 18 to be a member. This is a consequence of using mass mailings.
Obviously, many parents believe that federal law prohibits a minor from receiving a prescreened offer. However, according to Frank Dorman of the Federal Trade Commission, no such law exists.
There is no prohibition against sending a prescreened offer of credit or insurance to a minor (unless, perhaps, there are any state laws to that effect), Dorman said.
Consumers are also often incensed about the opt-out provision included with every First National Card mailing. The notice says that to stop receiving prescreened credit offers from CCS and other creditors, just call 1-888-567-8688.
This number (1-888-5-OPTOUT) is supposed to stop unsolicited prescreened offers, either for five years or permanently. Nevertheless, as Tracye of Long Beach, California found out, the number does not always work.
I received an unsolicited credit card in the mail today for $6,500 worth of catalog credit with this company (CCS). This is strange especially since I am on a 5-year opt-out of unsolicited credit offers...
Why would Tracye still receive offers from CCS?
What Tracye didnt know is that 1-888-567-8688 is specifically tied to the consumer credit reporting companies: Equifax, Experian, Innovis and TransUnion. If CCS received your name and address from one of these companies, calling the opt-out number will indeed stop future offers.
However, if CCS gathered your information from someone other than the credit reporting companies, calling 1-888-567-8688 will not stop future CCS offers.
CCS says that if your approval number starts with anything other than 7, 8 or 9, your information was not gained from a credit reporting agency list. Therefore, calling 1-888-567-8688 wont help.
For CCS or any other company that received your information from someone other than the major credit reporting bureaus, the only way to stop future offers is to opt-out directly with the company. You can opt-out directly with CCS at 888-884-0017 and with CCA at 888-877-1267.
Is it a scam?
We have over 160 complaints against these companies, said Commissioner James Campos of the Nevada State Consumer Affairs. Beyond saying that, I have no comment.
Nicole Moon, spokesperson for the Nevada Attorney General, said, We cant comment about ongoing investigations, but will say that we take each complaint very seriously.
While CCS and CCA may well be operating within legal boundaries, the dense wording and baffling legalese of the offer are the very definition of confusing. Companies know that when a consumer is confused, they're more likely to make mistakes.
Throw in the fact that CCS doesnt have a website and you have the perfect recipe for mass confusion.
However, not everyone falls into the trap.
Like so many others, I immediately got online and saw nothing but complaints, so you think youve almost been had, Daniel of Westerly, Rhode Island said. Only later did I actually read the paperwork and realized this was just a junk-mail catalog shopping card, and I should have just tossed it out in the first place.
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