The Federal Trade Commission stepped up its prosecution of companies portraying high interest personal loans as bad credit credit cards and bill collection services, according to news reports. FTC investigators have traced complaints stemming from telemarketing calls to at least two companies, and investigators promise more details about their alleged fraud in the weeks to come.
Philadelphia Inquirer columnist Jeff Gelles chronicled one of the Commission's investigations, involving a product called the "Express Platinum Card." In court filings, federal investigators describe a scenario in which consumers applied for emergency personal loans through links they found online. Within days, a representative from the Pennsylvania-based company would contact applicants, congratulating them on winning approval for the Express Platinum Card.
Scam played on similarity to the Platinum Card from American Express
Investigators claim that the telemarketers played on a deliberate similarity to the Platinum Card® from American Express, so they could claim application processing fees of up to $100 per new account. Gelles reviewed an internal company email that described customers as "stupid," and easily talked into accepting a line of credit that didn't report to any credit bureaus and couldn't impact credit scores.
Telemarketers used scripts to assure customers that their new accounts worked like American Express, although in reality the credit line only enabled large wholesale purchases of office supplies and other goods investigators called overpriced.
Other investigations target robocallers, fake call centers
Meanwhile, FTC officials invited journalists to a briefing about a similar investigation of a company claiming to collect on debts that consumers didn't owe. In a statement to reporters, investigators warned that at least one phony collection agency hired offshore call centers that normally handle legitimate debt collection services.
So far this year, the FTC has already shut down one company that used robocalling software to promote credit card debt settlement services. Investigators said that more than 13,000 consumers paid telemarketers to negotiate balance transfer offers and low interest rates on their behalf, even though no such negotiations took place.