Research and Statistics

FTC settles case against fee-harvesting credit card issuer


Florida-based company used fast-talking computerized voice to deceive consumers, federal agency alleges.

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The Federal Trade Commission has settled a case against a Florida-based issuer of “fee-harvesting” credit cards that promised people with poor credit they would get good credit cards, but delivered lousy ones that charged high upfront fees that were impossible to cancel.

The FTC brought the action in May against Robert James Fischbach and his companies — Infinite Financial and National Benefit Exchange of Clearwater, Fla. — charging them with deceptively marketing their credit cards to consumers nationwide. The court order settling the case, signed on Dec. 5 but announced Dec. 10, bars the parties from making any further misrepresentations about any products and services as well as preventing Fischbach from selling his lists of customer contact information.

The order also imposed a fine of $2.5 million, but suspends all but a few thousand, due to his inability to pay. Fischbach’s companies already had assets worth $15.9 million seized after the initial filing. The assets were forfeited in October.

The action against Fischbach is one of 13 complaints filed by federal agencies in the multiagency “Operation Tele-PHONEY” sweep, which seeks to clamp down on deceptive telemarketers.

In this case, according to court documents, Fischbach and companies had telemarketed purported general purpose credit cards since at least 2005.

The original court complaint, filed in May, claimed that telemarketers would woo consumers — usually those with poor credit histories — by telling them they could have preapproved, general purpose cards with limits of up to $7,500 and a cash advance ability of up to $1,000 for an upfront fee ranging from $200 to $300. The cards could be used anywhere, consumers were told.

During the call, consumers were asked for bank account information, including routing and account numbers.

“Following the initial sales pitch,” according to the court documents, “defendants begin the ‘verification’ process, mostly using a computer-generated voice. Defendants record the verification, including the consumer’s answers to questions, but the initial sales pitch is not recorded. Defendants use this verification process to introduce vague ‘qualifications’ to the representations made earlier in their pitch. These qualifications. are made in a rapid, computer-generated voice, using long, complicated sentences or phrases that are often difficult to comprehend.”

Those able to understand the fast-talking computer discovered that the salesperson had not told the truth. The cards were only good for purchases from a certain catalog, and there were multiple additional fees that would be directly debited from the consumer’s account, including a $35 “early termination” fee and a quarterly “inactivity fee.”

Those who tried to cancel the account and the upfront fee reached another Fishbach employee, who assured consumers that they had successfully canceled their accounts, wouldn’t be charged, and offered a confirmation number for verification. That number, too, was bogus, the FTC charged: Consumers were charged the fee anyway.

The agency invites people who feel they may have been deceived by fraudulent, deceptive or unfair business practices to report the acts via the FTC’s online Complaint Assistant or to call (877) FTC-HELP.

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See related: 5 things to know about fee harvesting credit cards, Feds seek $200 million for ‘fee harvesting’ credit cards, Danger signs of fee harvesting cards

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