Attorney General Abbott Files Suit, Freezes Assets Of Fraudulent Credit Card Approval Company
AUSTIN - Texas Attorney General Greg Abbott today announced a court action approved Tuesday to freeze bank and other assets of U.S. Credit of Houston and its head corporation e-Telemation Inc.
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In addition, the lawsuit filed by the Attorney General cites the company for the unlawful telemarketing practice of persuading consumers to disclose private financial information when they called an advertised toll-free number. The company promised fast, guaranteed credit card approvals using this information, none of which transpired. Yet they still debited consumers' bank accounts to collect "fees." Also named in today's lawsuit are U.S. Credit directors Michael C. Corbell and Robert F. Leaumont Jr.
"Consumer scams targeting people who need to establish credit run rampant these days, and I urge unsuspecting consumers not to disclose any personal financial information just to apply for a credit card. It's not necessary," said Attorney General Abbott. "My Consumer Protection office will take pains to expose and make examples of those who brazenly take someone's money without providing a single service as advertised."
The company advertised its services in various newspapers and mail circulars nationwide, soliciting consumers with guaranteed credit card approvals and $10,000 credit limits via a toll-free telephone number.
When consumers called this number, company telemarketers would convince them the quick approval process would be contingent upon their providing private financial information, such as checking account numbers and bank routing numbers. If consumers questioned the need for giving this information, telemarketers allegedly responded that the company needed a means of verifying that these callers actually own a bank account, but then assured them their accounts would not be debited.
The company then allegedly made unauthorized withdrawals of $99 each from these checking accounts, even from consumers who had decided not to participate during the initial phone call.
In return for this unlawful account debit, the company then mailed many consumers what amounted to a credit card kit consisting of a list of companies and banks with which they might apply for credit. Consumers never obtained a single credit card from the company, as advertised.
When these deceived consumers complained that the unlawful account debits and the credit card kits amounted to unkept business agreements, company representatives would remind them that taped phone conversations proved the consumers made specific agreements. Many telemarketing agents allegedly laughed at consumers, used profanity or disconnected the calls.
When pressed, the telemarketers described the $99 debit as an administrative processing fee, and described an additional $9 per month fee, which was undisclosed, as a monthly membership fee payable for a year. Many consumers had this membership fee deducted from their checking accounts several times a month.
The telemarketers instructed dissatisfied consumers to return the mailed kits unopened to the company to get a refund. This also proved deceptive because consumers later were told that the company would make only a 75 percent refund, but also require consumers to show proof of credit denial from at least four credit card companies.
The Attorney General sued the company for numerous violations of the Texas Telephone Solicitation Act, the state Finance Code and the Deceptive Trade Practices Act. The suit seeks to halt these unlawful activities, and provide for restitution for harmed consumers, penalties, court costs and attorneys' fees.
The company also failed to register as a telemarketer or execute a bond with the Texas Secretary of State, as required.