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FTC Halts Bogus "Gold Card" Scheme

WASHINGTON, Nov. 6, 2001 -- An operation that deceptively sells its gold card by representing that it is a MasterCard or Visa has been shut down by a U. S. District Court at the request of the Federal Trade Commission.

According to the FTC, the defendants enticed consumers who had negative credit histories with promises of high credit limits and zero percent interest rates. Instead, the "merchant card" they provided only allowed users to purchase items from the defendants' Web sites or catalogs. The defendants' assets have been frozen and a receiver has been appointed pending trial on FTC charges that the scheme violates federal law.

The FTC complaint names Salyon, Inc., d/b/a First Liberty Financial, Salyon National Credit, Shop Salyon, Quicklinks.com, and their principals, Mark Joseph Lyon, John Donald Lyon, and Kurt Charles Uhler. The defendants are based in Aliso Viejo, California and Lake Forest, California.

The FTC alleged that the defendants targeted consumers with negative credit histories, using pitches like, "You can re-establish your good credit!" and "Account Status: APPROVED GOLD CARD." For fees ranging from $49 to $64, the defendants offered "pre-approved" credit cards with $15,000 credit limits, and zero percent interest rates for the first year.

Their mailings claimed that consumers who posted a favorable payment history with the new card would have these payment histories reported to the three major credit reporting agencies. They also claimed that consumers who maintained a favorable payment record would be issued a MasterCard with even better terms -- a lifetime zero percentage rate.

According to the FTC, the defendants failed to disclose that the cards they issued could only be used to purchase items from their own catalogs and Web sites, and that consumers could only charge 30 percent to 50 percent of the purchase price. They had to pay the remainder using a check or money order. Consumers only learned the cards were not full service credit cards after they had paid the defendants, the FTC alleged.

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