Markets Wired

At the request of the Federal Trade Commission, a federal district court judge ordered a deceptive marketing operation to pay more than $3.7 million as part of a contempt action for violating a 2008 court order. The FTC alleged that the defendants targeted consumers who were unemployed or had poor credit, selling a bogus “$10,000 credit line” that was really an online shopping club membership and a “no cost” prepaid debit card with hidden fees.

In 2008, Dale Paul Cleveland, William Richard Wilson, EDebitPay LLC, and three now-defunct companies paid more than $2.2 million to settle FTC charges that they made unauthorized debits from consumers’ bank accounts and deceptively marketed prepaid debit cards and short-term loans. The settlement order permanently barred them from making future misrepresentations or unauthorized debits. But in marketing a “$10,000 credit line,” the FTC alleged that the defendants violated the order and misrepresented that they were offering a general line of credit, when they were actually offering a shopping club membership with a credit line could be used only to buy merchandise from the club. Instead of clearly disclosing what they were actually selling, the defendants buried the truth in fine print. The FTC also charged the defendants with marketing a “no cost” prepaid debt card that carried a variety of fees they failed to disclose.

The court held the defendants in contempt of the 2008 order and imposed a $3.7 million judgment. The contempt order was entered by the U.S. District Court for the Central District of California, on February 4, 2011. The defendants have filed a notice of appeal of the order.

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(EDebitPay)
(FTC File No. X070038)