Florida AG Shuts Down Telemarketing And Credit Reduction Scam
The Federal Trade Commission and the Florida Attorney General recently announced that they had received a temporary order shuttering an Orlando based credit card interest rate reduction telemarketing scam and freezing assets. The FTC and the Florida Attorney General are pursuing both a permanent closure of the businesses running the scam and seizure of the business assets placing the LLC’s named in the suit into receivership. Individuals are named as defendants apart from the businesses they used to run the scam. The named defendants are Gino de Paz, Grace de Paz, and Shabana Khubal.
What the FTC Discovered
A Federal Judge for the Middle District of Florida in a 37 page order found that the defendants and their business frequently misrepresented that people could have their credit card interest substantially reduced, saving thousands of dollars while paying off their debt three to five times faster. They telemarked a relationship to companies like Visa and Mastercard as well as demanding an upfront fee of nearly $4,000. The FTC alleged that the defendants began operating the scam in 2014 and earned millions of dollars.
The FTC alleges that the scam worked by targeting those in financial distress or the elderly with telemarketing calls from a representative of “Credit Card Services.” Once the scam had a victim, the scammers would ask the victim to confirm their personal information including their social security number. The victim would also be told that they would not be charged for the service until their credit card interest rate was lowered. In reality the scammers were often charging the victims credit cards or bank accounts during the call.
With the victim’s personal information the scammers would then sign up for new credit cards with a low teaser rate in the victim’s name and initiate a balance transfer from the victims old cards to the new credit cards. The perpetrators of the scam would also neglect to tell the victims about fees and charges associated with the new credit cards, especially about the substantial industry standard balance transfer fees charged by credit card companies.
Victims of the scam would be lucky to see any interest rate reduction over the long term. Often in addition to the money paid to the scammers, the added fees would cancel out any gains if the new credit card coincidentally had a slightly lower interest rate. Many consumers who figured out the scam tried to obtain refunds and those who succeeded only did so after threatening to contact law enforcement. The defendants in running their scam violated 9 different rules related to consumer debt relief and telemarketing.
In addition to seeking to seize the ill-gotten gains of this scam, the Florida Attorney General is also pursuing state law fines of $15,000 per transaction from the defendants in addition to court costs and attorney’s fees
Unfortunately, these scams are common. This is the third case brought by the FTC this year related to some type of consumer debt scam. It’s important for consumers to know their rights when dealing with legitimate debt reduction services, For example since 2010 it has been illegal for debt reduction services sold over the phone to charge a customer before their debt has been reduced. To learn more about this case and ways to protect yourself against consumer debt scams you can visit the FTC website here.