Court Freezes Funds Of Advance Fee Credit Card Scam
Attorney General Spitzer today announced that his office has filed a lawsuit against an advance-fee credit card scam operating in Western New York.
According to legal papers, Credit Card Services and its operator, Richard E. Wood and its former operator, Michelle A. Wood, prey upon consumers who, due to poor credit histories or insufficient income, have been unable to obtain credit cards. Credit Card Services is accused of falsely advertising to desperate and vulnerable consumers who have little access to credit, that for an advance fee it will issue a general purpose credit card with generous credit limits.
"Too often, financially-burdened consumers are preyed upon by scams offering false hope of access to credit," Spitzer said. "When it comes to credit card offers, consumers should not pay in advance regardless of the promise or guarantee."
Credit Card Services places advertisements in pennysavers or other free community newspapers offering unsecured credit cards with a guaranteed approval of up to $7,500 regardless of credit history or bankruptcy. Through direct mail solicitations, Credit Card Services also represents that, for a processing fee of between $49 - $89, the consumer is guaranteed to receive an unsecured credit card irrespective of the consumer's credit situation.
Credit Card Services requires consumers to complete application forms and to provide personal financial information, including their social security numbers, even though the company does not issue credit and has no legitimate use for this information. This company's compiling and maintaining such records poses a risk to consumers of identity theft.
Consumers who mail in payments and application forms, however, do not receive the promised credit card. Instead, some consumers receive a list of banks which Credit Card Services claims will issue credit. Other consumers receive nothing.
In commencing the enforcement action, Spitzer's office obtained a restraining order freezing approximately $8,000 of ill-gotten funds held by Richard Wood in a Chautauqua County bank. The lawsuit filed by Spitzer's office seeks full restitution for injured consumers, civil penalties for violations of consumer protection laws and court costs.
The lawsuit also seeks a court order barring Wood and Credit Card Services from engaging in the credit card referral, loan brokering or direct marketing business in New York State unless a $500,000 bond is posted. Spitzer also requests an order requiring Credit Card Services to provide an accounting of the names and addresses of all consumers who have paid a fee for services and to surrender materials which contain personal identification information.
Over the past several months, at least 364 consumers have been victimized by Credit Card Services' fraudulent and illegal scheme.
This case is the fifth enforcement action Spitzer's office has commenced against advance fee credit card scams in the past three years. In 2001, Spitzer's office filed lawsuits against three Canadian-based advance fee credit card scams. In an important decision issued last February, the Appellate Division of State Supreme Court upheld the Attorney General's authority to obtain relief for victims nationwide against an advance fee credit card scam, stating that "New York has a vital interest in securing an honest marketplace in which to transact business..." The office subsequently obtained court-ordered injunctions and judgments against the operators of the scams.
Individuals with questions about the case against Credit Card Services or with complaints related to advance fee credit offers are encouraged to contact Spitzer's office by calling his consumer help line at (800) 771-7755. For consumer tips on advance fee offers, consumers should visit the attorney general's web site at www.ag.ny.gov/consumer-frauds/advance-fee-loan-sharks.
This case is being handled by Assistant Attorney General Mark Fleischer of the Consumer Frauds and Protection Bureau.