The Federal Trade Commission (FTC) has put an end to a $275 million credit card scam which affected around five million bank customers and card holders over the past four years.
The Federal Trade Commission won a federal court case earlier his month which brought to a halt the operations of BadCustomer.com, a website which is alleged to have illegally obtained $275 million by scamming credit card holders and bank customers.
The FTC claims that a company called I Works, Ind enticed consumers to become members of their program as part of a supposed trial membership. Membership promised to allow consumers to receive information about federal grants and product. However, all of the information which was provided turned out to be completely bogus, as did the products offered.
Despite the alleged “trial” status of the membership, in reality the scam was a forced continuity membership. Once the site had obtained credit card information for a customer, the company continued to charge the membership fee to the card each month. FTC Chairman Jon Leibowitz said,
No consumer should be sucker-punched into making payments for products they don’t know about and don’t want.
If the customer attempted to complain or threatened to report I Works, Inc to the FTC, the company threatened to submit the customer’s details to the website BadCustomer.com. It emerged during the investigation that I Works, Inc also operated the Bad Customer website.
Customers who were listed on the website were people who had been reported as not paying their bills or who made frequent requests for credit on items purchased. If listed on the Bad Customer, consumers could potentially find it very difficult to make future online purchases.
When victims of the scam found themselves unable to cancel the monthly charges, many of them turned to their credit card issuer for help. Credit card companies investigated the charges and often put in place charge backs as a temporary credit until such time as the issue could be resolved.
It was these numerous charge backs which eventually brought the scheme to light. Reports claim that 10 individuals, 10 corporations, and 51 shell corporations were involved in the scam which was in operation for around four years. One of the individuals has been jailed and all of the involved corporations have now been shut down.
Estimates put the total number of consumers who fell victim to the scam at 5 million, 500,000 of which went to their credit card issuer’s dispute process and received charge backs.
Similar Personal Finance News
- Security Concerns Cost Merchants $110B
- Platinum Trust Card Not To Be Trusted Says FTC
- Recent Data Breach Raises Credit Card Security Concerns
- New Medical and Insurance Scores Launched By FICO
- Eastern Bank Card Customization
- Discover Partners With DoSomething.org
- Students Warned To Be Vigilant Against Identity Theft
One Response to 'FTC Shut Down Bad Customer Scam'
by Antony on July 4, 2011
Highly good cheers, I’m sure your trusty visitors might want even more posts like that keep up the great hard work.