Company to pay $700,000 for selling worthless credit card protection

| Friday, May 24, 2002

An Orlando, FL-based company, doing business as Advanced Consumer Services (ACS), caught up in the Federal Trade Commission's 2000 "Operation Protection Deception" law enforcement sweep will pay approximately $700,000 to settle charges that they made misrepresentations when telemarketing worthless credit card protection packages to consumers.

The payment is the largest redress settlement to date obtained by the Commission in a credit card protection fraud case. In addition, the company' s principals Anthony and Tracy Andrews will be permanently banned from selling credit card protection or any credit-related goods or services.

According to the FTC, ACS used telemarketers to contact consumers, falsely claiming they were calling on behalf of the consumers' credit card issuers or a government agency. They would then claim criminals were using the Internet to steal consumers' credit card numbers, and consumers would be held fully liable for any unsubstantiated charges made by such online thieves. The defendants claimed consumers would be covered in case of such theft if they purchased the defendants' credit card protection. They offered the protection on an unconditional basis, with an unconditional money-back guarantee. In truth, all of these claims were misrepresentations, the FTC stated.

Additionally, the Commission charged, ACS occasionally obtained the consumers' credit card numbers and charged them for the protection package whether they wanted it or not. Under federal law, consumers are covered for all but $50 of any unauthorized charges made to a credit card account and $500 for unauthorized debits to a debit card account.

The stipulated judgment and order for permanent injunction announced April 24, 2002, were reached with the individual defendants and corporate defendants TNT Talks Inc. and Least Cost Utilities Inc., all of which were doing business as Advanced Consumer Services.

Through the order, which requires approval of the federal district court, the individual and corporate defendants have settled allegations their actions violated the FTC Act and the Telemarketing Sales Rule (TSR).

Under the terms of the stipulated final order, the defendants will be required to post a $300,000 performance bond before conducting any telemarketing activities. This bond requirement is designed to ensure that consumers are protected from misleading practices if the defendants decide to telemarket any other products or services in the future.

Next, the order contains terms specifically designed to stop the defendants from making similar misrepresentations or violating the law in the future. The order also contains language prohibiting the defendants from misrepresenting any fact material to a consumer's purchasing decision, and from violating the TSR.

Further, the order provides that the defendants will pay consumer redress totaling approximately $700,000, including more than $630,000 in currently frozen assets and between $60,000 and $80,000 from the sale of a condominium in Orlando, Florida. The order also contains a $2 million suspended judgment against the defendants, which would be due if they are found to have misrepresented their financial condition.

Finally, the order lifts the freeze on the individuals' and the company's assets, prohibits them from transferring their customer lists and contains standard monitoring, compliance and record-keeping provisions.

The Central Florida Better Business Bureau and the Florida Attorney General's Office assisted the FTC in the investigation and resolution of this matter.

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