Credit Cards Guide

An alleged scam that claimed to help consumers with credit card debt was stopped through action by the FTC.

Many consumers faced problems with credit card debt during, and after, the recession, which may have led some companies to take advantage of the situation by making false promises.

A number of companies that allegedly used deceptive calls promising to reduce interest rates for consumers’ credit cards have been ordered to stop these practices. The order comes after a complaint from the Federal Trade Commission against Advanced Management Services, Rapid Reduction System’s and PDM International. Along with not being able to make the calls, the companies’ assets were frozen and the firms were taken over by two receivers appointed by the court.

According to the FTC’s complaint, people were contacted by the companies, which often use robocalls as a means of connecting with the consumers. The calls used an urgent message claiming to be from card or financial services and the consumers needed to contact them regarding their credit card interest rates. As a result of the alleged tactics, consumers were often confused into thinking the calls came from their account issuers.

Through the calls, the companies managed to sign up consumers for a program that promised to provide at least $2,500 in savings on their interest rates. For this, cardholders were charged between $499 and $1,590 in upfront fees, with the promise the money would be returned if the aforementioned savings were not achieved.

Rather than getting interest rate reductions, the companies allegedly sent people information suggesting they pay off their credit card bills early, which would save them on the amount of interest they pay. Those seeking refunds from the companies were either denied or saw $199 taken away from their funds.

“The last thing debt-ridden consumers need is to be deluged by illegal robocalls – especially when all the calls are offering is a scam,” said Jon Leibowitz, FTC chairman.

Experts note that consumers should be wary of any phone calls that imply they are from legitimate financial institutions. People who are in doubt about the source of a phone call should contact their bank or credit card lender to verify any communications.

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