Phony credit card offers cost fraudsters $7.5 million
By Aundraya Ruse | Published: September 22, 2012
Three men involved in a Philadelphia-based credit card telemarketing scheme will pay up for preying on down-on-their-luck consumers.
According to an Federal Trade Commission release, Blake Rubin, Chase Rubin and Justin Diaczuk will cough up more than $7.5 million to settle the fraud charges against them and their companies.
A court filing explains that the three-year scheme consisted of the defendants preying on "consumers who are struggling financially, many of whom recently applied online for a payday loan." The men offered victims a phony "platinum" credit card which they promised would provide consumers with a substantial credit limit -- once they paid an upfront fee of $99 and agreed to a recurring monthly fee of $19.
"The defendants do not report to credit bureaus, and their 'credit cards' only access an online store the defendants operate, which offers a variety of off-brand, outrageously overpriced products, most of which can be purchased only in bulk quantities," the FTC said in an earlier release. "Examples of items for sale in the defendants' store include a case of 3,240 'dolphin-shaped craft embellishments' for $356.40, a case of 432 shower caps for $430.56, and a case of 144 'play flutes' for $573.12."
According to the FTC, over the course of the scheme, the defendants racked up at least $4.82 million in sales of a credit card that could not -- as they had promised -- be used anywhere that accepts Visa, MasterCard or American Express. The trio had operated under business names including Apogee One Enterprises, Marquee Marketing and CR Ventures.
In addition to the monetary settlement, the defendants were permanently banned from telemarketing. They must also report their future business endeavors and any changes of address, telephone number or name.
The action taken against the defendants was a part of the FTC's ongoing crackdown of "last dollar scams," in which fraudsters take advantage of struggling consumers who are "down to their last dollar."
To protect yourself, the agency offers information about telephone scams and tips on how to avoid them.See related: 'Jury duty' phone scam makes the rounds, Don't play around with card phone scams
- Borrowing from friends and family: Your 6-step guide – If as a last resort you need to ask you family or friends for money there are way to make it more palatable for both of you ...
- Consumer protection bureau warns about pay-by-phone fees – The government's consumer watchdog issued a warning Monday that companies are charging pay-by-phone fees that can be unnecessary and misleading ...
- DIY credit card arbitration: You may be able to opt out – Consumers can preserve their right to go to court instead of private arbitration in many cases by going through and opt-out process ...