The Shameful Sham

By Ray Schultz

I shouldn’t admit this, but sometimes I get nostalgic for the scam artists of the 1980s. Even the worst of them were fun to cover as a reporter.

Well, not to worry. The old rogues may be gone. But the free market provides.

Say hello to E.M. Systems & Services, LLC, and its web of “entities and fictitious business names.”

This outfit cold-called consumers and promised to reduce their credit card interest rates, according to an amended complaint announced last week by the Federal Trade Commission and the Florida Attorney General.

But the victims, who paid from $695 to $1,495 apiece, got bupkis for their money, the lawsuit alleges.

Most did not “achieve any debt relief at all, but instead found themselves saddled with even more debt than before because of the fees the (defendants) charged to their credit cards,” the plaintiffs charge.

And, of course, many never got the refunds they were promised if they failed to realize big savings (typically, $5,000 in 90 days), the court papers state.

As I live and breathe, it sounds like an old-fashioned credit repair scheme. And it was conducted in the time-honored way—not online, but by phone, according to the FTC and the Florida AG.

With E.M. Systems directing them, callers working for One Easy and other telemarketing firms “identified themselves as being with ‘card services,’ ‘credit services,’ ‘card member services,’ or one of the unregistered fictitious …businesses,” the complaint charges.

Then they “took steps to win consumers’ trust and create an air of legitimacy to their sales pitch.” it adds.

The callers told prospects that they already had “the names of some of their credit cards and/or the amount of their credit card debt,” the complaint continues.

Despite this purported knowledge, they then asked consumers for their credit card numbers, and billed them while they were still on the phone before any services could be rendered, the papers state.

And once the fees were paid, many consumers “never heard from the Debt Relief Defendants again,” and their “attempts at further communication were ignored,” the complaint continues.

Others were sent packets of information and papers to fill out. But they “rarely, if ever,” got the promised interest rate reductions, the FTC and AG maintain.

Another defendant, CardReady, arranged for at least 26 shell merchant accounts to “be used to process credit card payments,” the government plaintiffs charge. And this led to illegal credit card laundering and factoring of credit card transactions, they add.

CardReady, a so-called Independent Sales Organization, “maintained an agreement with a credit card processor named First Pay Solutions,” the complaint says.

This part of the scheme unraveled when “11 of the 26 shell LLCs were placed on the MasterCard Alert to Control High- risk (“MATCH”) list for excessive chargebacks,” according to the complaint.

Here’s a link to the complaint if you want to read it yourself.

But let’s not prejudge. This is a civil action, and it is yet to be litigated. The alleged villains may end up signing a consent decree with no admission of guilt, or they could get off entirely.

What a throwback, though—it’s enough to make you feel young again. Assuming there’s an ounce of truth in the charges, though, I doubt that the people who were snookered are amused.

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