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Complaint Names Toronto
Credit Card Scheme

WASHINGTON, Oct. 22, 2002 -- The Federal Trade Commission has charged a Toronto-based company, First Capital Consumers Group, with operating a fraudulent advance-fee credit card business. The defendants' telemarketers, working from with "boiler rooms," told consumers that they would receive pre-approved MasterCard or Visa credit cards with low interest rates, credit limits of $2,000 or $2,500, and no annual fees.

Consumers paid the defendants by agreeing to have their bank accounts debited for the advance fee of $189 to $219. The Commission alleges that the defendants violated the FTC Act and the Telemarketing Sales Rule (TSR) in the promotion of advance-fee credit cards. A federal district court in Chicago has entered a temporary restraining order prohibiting false claims and freezing the defendants' assets.

"Fighting cross-border fraud requires a coordinated effort among law enforcement agencies," said J. Howard Beales, III, Director of the FTC's Bureau of Consumer Protection. "Fraud operators should realize that Canadian and American law enforcement are working as a team to shut them down, no matter which side of the border they're working from."

According to the FTC's complaint, since at least September 2001, First Capital Consumers Group's telemarketers targeted U.S. consumers who have poor credit histories and offered them pre-approved MasterCard or Visa credit cards, with low interest rates, no annual fees, and high credit limits. First Capital charged the consumers a one-time processing/membership fee ranging from $189 to $219, which consumers agreed to have electronically debited from their bank accounts.

The FTC alleges that none of the consumers who paid the defendants received the promised credit cards. Some of the consumers received packages of information on buying miscellaneous products or services, such as cellular telephones, magazines, automobile loans, discount prescription programs, or free vacations, which required them to pay additional money. Some consumers received nothing at all, and some received "stored value" cards, which the consumers can only use if they deposit money into an account to pay for any purchases made with the card.

The complaint alleges that the defendants violated the FTC Act and the TSR by falsely representing that they would provide consumers with MasterCard or Visa credit cards, when in fact, consumers did not receive the promised credit cards. The complaint further alleges that the defendants violated the TSR by requesting or receiving a payment in advance of obtaining the loan or credit and representing a high likelihood of success in obtaining the promised credit.

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