Salyon "Gold Card"
Settles Federal Charges

WASHINGTON, Nov. 7, 2002 -- Operators of a scheme that sold "gold cards," representing them as Visa or MasterCards but instead providing their own "merchant cards" that limited consumer use to purchases from their own catalogs or Web sites, have settled Federal Trade Commission charges that the scheme was deceptive and violated federal law.

In November 2001, a U.S. District Court froze the assets of Salyon, Inc., and appointed a receiver for the company at the FTC's request. The FTC alleged that the defendants targeted consumers who had negative credit histories while deceptively claiming that they offered a MasterCard, Visa or equivalent credit card; that they offered a second MasterCard that featured a lifetime zero percent interest rate; and that they would report consumers' favorable credit histories to the three major credit reporting agencies.

Instead, the complaint alleged that the defendants' "merchant card" only allowed users to purchase items from the defendants' Web sites or catalogs. The complaint also alleged that the defendants' failure to disclose that consumers only could use the card to purchase items from their Web sites or catalogs, and the failure to disclose that consumers could not use the card to pay the entire purchase price, also violate federal law. These settlements and final court orders, resolve the case.

The Court orders stemming from the settlements bar the operators from marketing any credit or merchant cards and from falsely claiming they will assist consumers improve their credit by reporting credit histories to the credit reporting agencies. The orders also bar the defendants from misrepresenting any product or service they are selling and requires that they disclose all information material to a consumer's decision to buy a product or service prior to the sale. The defendants also are barred from deceptively charging for expedited delivery.

Due to the financial condition of Salyon, Inc. and its officers, Mark Lyon, and John Lyon, the order does not require them to pay consumer redress. If it is discovered that any of these defendants materially misrepresented their financial situation, their order requires them to pay $2.7 million, the total amount of sales from the scheme.

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