|by Mr Credit Card|
A catalog credit card and telemarketing scam has just been busted by a Federal Judge after a complaint by the FTC. The companies and people involved were based in Philadelphia and they deceived consumers into parting with fees on a useless catalog card that was supposed to build their credit.
As a prelude, this is how a catalog card works. A catalog card is not a Visa, MasterCard, American Express or a Discover card. Instead, it is a card where you are given a credit limit and you can only use it to make purchases at their online store (ie it is a proprietary store). To entice folks to sign up for such cards, they promise (or are supposed to) report your payments to credit bureaus. This scam involves deceiving consumers about the nature of their product and in the process scamming consumers millions of dollars.
The product involved was a catalog card called Platinum Trust Card and Express Platinum Card. These cards have the following feature. They promised an unsecured credit line of $9,500 (which is actually the norm for catalog cards). Consumers will have to pay an upfront fee of $99. Thereafter, they will have to pay a $19 monthly fee. If you take out the calculator, that works out to $238 annual fee a year! The cards are supposed to be report timely payments to credit bureaus.
The accusations against the defendants was on how they went about marketing their cards. They did so primarily through telemarketing. And they made a few false representations.
This practice continue to happen even after consumers called in to complain. The FTC even highlighted examples of representatives who acknowledged the complaints and still withdrew money from consumers bank account. They were many cases that such withdrawals resulted in overdraft fees and some consumers even had to close these accounts to stop these incidents. The FTC did however mention that the only people who actually got back their money were those who complained to their bank and those who actually contacted BBB.
The way that the defendants organized their business was also highlighted and makes for an interesting read. It involves a few defendants and a few registered LLCs in a pretty elaborate scheme. So this is how the whole scheme works. The parties involved in this case were Chase and Blake Rubin, Justin Diaczuk and Jules Shore. The corporate entities involved were Apogee One Enterprise LLC and Marquee Marketing LLC.
So here is how the pieces of the puzzle fit together. Black Rubin does business as Maxim Management Group LLC and has open accounts with payment processors for the Platinum Trust Card. He is the primary contact for any complaints that are directed to BBB or through the phone representatives. Chase Rubin also does business as Maxim Management Group LLC and Oakmont Management Services LLC (both of which are Florida registered). He is the one who registered the domains platinumtrustcard.com and expressplatinumcard.com. He has also opened accounts with several payment processors involved with these cards.
When this whole scam first started, they actually operated out of Salt Lake City in Utah. And this is how they operated. Both Rubins claimed to operate through CR Ventures LLC, which is registered in Salt Lake City. This LLC does business as Platinum Trust Card and represents itself as being based in Salt Lake City. They have opened bank accounts and payment processor accounts under CR Ventures. They even settled a fraud charges with the state attorney in Utah with this entity. But it turns out that this entity was not even theirs. They actually own two entities called CR Ventures Now LLC and CR Ventures One LLC and the CR Ventures LLC was actually owned by an innocent person. But his LLC ended up being used and abused by these folks. The owner of CR Ventures ended receiving complaints from BBB, the State and consumers about Platinum Trust Card!
From January 2009 to August 2011, they operated under CR Ventures LLC (which they do not own) in Utah until they were sued by the State of Utah. They then changed the card name from Platinum Trust Card to Express Platinum Card and claim to operate out of Nevada!
The Nevada based LLC is Marquee Marketing LLC and is owned by Jules Shore. Jules registered domains that were tied to the cards they operated, signed a couple of virtual office accounts and essentially was funnel for proceeds from the whole scam.
Apogee One Enterprise LLC is operated by Justin Diaczuk and this entity has received money from consumers of the Platinum Trust Card and also funded what the FTC called boiler rooms (rooms of telemarketers), and even issued refund checks to consumers!
After the complaint by the FTC, a federal judge has ordered that all operations by the defendants and their entities to cease and their assets frozen.
Lesson To be Learned – But there are many lessons to be learned from this whole episode and also many unanswered questions. Firstly, the FTC did not mention who the payday loan folks were who presumably sold the info to the defendants and their entities. It is also scary that someone else could use your LLC as a pretext to market a scam. One should feel for the the owner of CR Venture and the unjustified complaints he has received.
The extent that people go through to hide their trails is also amazing. In this case, it involves four LLCs and four different people operating them, channeling funds to each other as “management fees”. Another thing that struck me was that there will always be payment processors who will be willing to service even scam artist. If one goes to a reputable processor, there is simply no way that you could ever be accepted or stay as a customer with the sort of refund and return rates (ie charge backs).
But for those who have fallen on hard times, they appear to be the most vulnerable to scams like that. In this instance, troubles began when they were simply cash strapped and took out a payday loan. Then their information is probably sold to scam artists like that and the telemarketing begins, filled with lies and deception.
It was also interesting to note that it appears none of the folks sitting behind the phones and actually deceiving the people on the other end of phone were not charged. One could only assume they were given scripts to follow. The FTC complaint mentioned that none of the actual telemarketers seem to know what they were actually selling! Some thought they were selling memberships, and others thought it was just a plain credit card. The real lesson is that if you have bad credit and you do really to rebuild it, the first priority is to remove inaccurate items from your credit report. And if you wish to get a credit card to build some history, a secured credit card is probably the best way to go about it.
FTC Complaint Letter