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Canadian telemarketers penalized $5M for credit card scam

Jeremy Simon

Here’s an item for those of you cheering against shady telemarketers: A U.S. court has granted the Federal Trade Commission’s request to penalize a Canadian group that engaged in a cross-border telemarketing scheme. Under their ploy, the Canuck fraudsters offered credit cards and free gifts to consumers in exchange for a fee — but ultimately failed to provide either the cards or items.

The U.S. District Court for the Northern District of Illinois ordered Pacific Liberty, as the defendants are collectively known, to pay approximately $5 million, which is the amount in net sales earned through the cross-border scheme. The defendants are also barred from violating the FTC Act and the Commission’s Telemarketing Sales Rule (TSR).

“The FTC’s complaint charged the defendants with using outbound telemarketing to call U.S. consumers,” says a release on the FTC Web site. “For an advance fee of $319, which they electronically debited from the consumers’ bank accounts, the defendants promised that they could deliver Visa or MasterCard credit cards, along with free gifts such as cell phones.”

Victims were left with a hole in their checking accounts and no credit cards or “complimentary” gifts for their financial loss. Instead, and possibly adding insult to injury, consumers were provided with a “member benefits” package that included booklets on improving their creditworthiness. It is unclear whether Pacific Liberty shared any helpful hints on avoiding fraud. The sole payment card supplied came in the form of a “member merchandise” card valid only for buying items from a catalog provided by the scammers.

For consumers hoping for a credit card approval, getting the call from Canada may have initially seemed like a blessing. “I was contacted on 07/27/03 by Pacific Liberty Liberty Wide. I was told by one of their representatives that I had been pre-approved for a credit card,” writes Lupe of Rockdale, Ill., in a posting dated Aug. 31, 2004, on Web site Ripoff Report. Despite authorizing them to debit her account and with the expectation that a mailing would arrive within a few weeks thereafter, “I did not receive the packet until December and that was not without constant calling by me,” she says. Undeterred and hoping to speed the process along, Lupe returned the packet the next day.

Despite several calls for an update, “All I ever got was that it was not final approved yet,” she says. “On one of my calls back in June of 2004, I was told that the card had been finally approved, almost a year later and that it was in the mail. I should receive within the week. I gave it two weeks before calling. However, I have no longer been able to reach anyone,” Lupe says.

Consumers didn’t just fall victim to promises of credit cards. The Ontario-based crew also offered brand-name computers in exchange for a debited fee. But those pledges also proved false, with no consumers ever receiving their promised machines, according to the FTC.

Sadly, it doesn’t seem like the FTC will run out of entries for its list of consumer fraud complaints anytime soon.

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  • Samuel

    This is EXACTLY why people need to know about ripoff report BEFORE tehy accept a credit card by phone. This ripoff has been around for a while, and if this poor woman had known to look at the Ripooff report in advance, she couldve saved herself some serious misery.