The Federal Trade Commission has pulled the plug on five companies based in Arizona and Florida that were allegedly responsible for millions of illegal pre-recorded calls from “Rachel” and others from “Cardholder Services.” State agencies in Arizona, Arkansas, and Florida also took legal action against similar companies.
Federal courts granted the agency’s request to temporarily halt five robocall operations that allegedly deceived consumers into paying hundreds or thousands of dollars by making phony claims that they could reduce credit card interest rates in return for an upfront fee.
“At the FTC, Rachel from Cardholder Services is public enemy number one,” said FTC Chairman Jon Leibowitz. “We’re cracking down on illegal robocalls by bringing law enforcement actions and pursuing technical solutions to the problem.”
The FTC gets more than 200,000 complaints each month about telemarketing robocalls, including calls from “Rachel” that pitch consumers with a supposedly easy way to save money by reducing their credit card interest rates. After collecting an up-front fee, however, the FTC believes that the companies do little if anything to fulfill their promises.
At the recent Robocall Summit, the FTC issued a challenge to the public offering a $50,000 cash prize for the best technical solution to block illegal robocalls on landlines and mobile phones.
Hi, I'm Rachel
In the robocall cases announced today, the FTC alleges that the defendants place automated calls to consumers, typically with a prerecorded message from “Rachel” or someone else from “Cardholder Services.”
The calls purport to have an “important message” regarding an opportunity to reduce high credit card interest rates. Consumers are urged to “press 1” to connect with a live representative, or “press 2” to discontinue getting such calls. Consumers who press 1 are connected to live telemarketers.
Most consumers have no way to screen the calls using Caller ID, as the incoming number allegedly is often “spoofed,” or displayed as a false number. In many cases, the name displayed on the Caller ID is so generic, such as “Card Services,” that it provides little information about who is calling.
According to the FTC, consumers who reach a live telemarketer are then pitched allegedly deceptive offers to have their credit card interest rates substantially reduced, sometimes to as low as 6.9 or even zero percent.
The telemarketers allegedly guarantee that lowering card interest rates will save the consumers thousands of dollars in finance charges in a short period of time and will allow them to pay off the balances more quickly. Some telemarketers allegedly claim that consumers will save at least $2,500 in finance charges and will be able to pay off their balances two to three times faster, without increasing their monthly payments.
In some cases, according to the FTC, the telemarketers claim to be calling from the consumer’s credit card company. In other cases, they use “Cardholder Services” to suggest a relationship with a bank or credit card company.
If the consumer expresses an interest in the rate reduction offer, the telemarketer sometimes conducts a purported “audit” to determine whether the consumer qualifies. Consumers provide their financial and personal information, and are then put on hold while the “audit” is completed. According to the FTC, the “audit” typically is used only to determine whether consumers have enough credit available on their credit cards to pay the company’s fee.
After consumers have been “approved” for the program, according to the FTC, the telemarketer informs them that there is an up-front fee, typically ranging from several hundred dollars to nearly $3,000. To convince them to pay the fee, telemarketers often say that it will be more than offset by the money the consumer will save through the program.
In some cases, the FTC alleges that consumers’ credit cards were charged even if they did not agree to pay for the service. In other cases, the defendants allegedly do not disclose a fee at all, or claim there will be no fee.