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Consumers who lost money via inbound telemarketing fraud will see a portion of that money returned under the terms of a stipulated court order that the Â鶹´«Ã½ Trade Commission announced today. The case, brought through the FTC's April 2002 "Dialing for Deception" law enforcement sweep, targeted defendants who allegedly placed ads in magazines or mailed postcards to consumers to pitch advance-fee credit cards to prospective buyers deceptively. According to the FTC, consumers who called the company in response to the ads had to pay up-front for the promised products, often receiving little or nothing in return. Through the order settling the case, the court has prohibited the defendants from engaging in similar deception in the future and secured $1.4 million that the FTC will use for consumer redress.

The Commission today also announced the settlement of a second "Dialing Deception" case, under which the defendants will pay approximately $65,000 for alleged misrepresentations made while pitching home-based medical billing opportunities.

"Consumers should take marketers' easy-money claims with a big grain of salt, whether the pitch is made through a cold call, a telephone pole promotion or in a classified ad," said Howard Beales, Director the FTC's Bureau of Consumer Protection. "The FTC continues to pursue cases against illegal advance-fee credit schemes and other scams. We're pleased that these particular defendants won't be making their deceptive claims any longer."

The FTC filed its complaint against Thomas Gregg Holloway, First Freedom Financial Corporation, and Southern Telmark Corporation. According to the Commission, since at least 1996, the defendants used advertisements in magazines and on postcards to deceptively pitch consumers an unsecured credit card in return for a fee averaging between $79 and $229. The ads allegedly targeted consumers who could least afford to make the payments or to lose money - those with credit problems or who were trying to re-establish their credit standing. The FTC alleges that when consumers responded to the ads by calling a toll-free number, the defendants offered either a Visa or MasterCard credit card with no security deposit, regardless of the consumers' credit history. The defendants allegedly said the application fee was a one-time processing fee. The FTC alleges that none of the consumers received the promised card after paying the fee.

Under the terms of the final order announced today, the defendants will turn over virtually all of their assets - totaling approximately $1.4 million - to the Commission for consumer redress. The order also bars defendants Holloway, First Freedom Financial Corporation, and Southern Telmark Corporation from the future sale of credit-related programs, products, and services through the use of telemarketing, mail, and the Internet. Finally, it contains standard monitoring and compliance provisions to ensure the defendants meet the terms of the order, as well as an avalanche clause that would require them to pay $30 million if it is found they misrepresented their financial condition.

The FTC today also announced the settlement of its complaint against a second set of "Dialing for Deception" defendants, Physicians Healthcare Development, Inc. (a/k/a PHD Billing), NetBiz, Inc., and Antonio Echavez. According to the FTC, the PHD defendants pitched a work-at-home medical billing opportunity to consumers for between $319 and $425, telling them that they could make between $3 and $15 for each claim processed. The defendants allegedly misrepresented that the system would instantly enable consumers to launch a home-based medical billing business, that consumers could earn a substantial income through this work, and that the doctors whose names they provided were prepared to hire the consumers to process their claims.

The final order against the PHD defendants contains strong injunctive relief, barring them from selling any business venture, employment opportunity, or work-at-home opportunity. In addition, it requires the defendants to provide the Commission with approximately $65,000 in frozen assets. Finally, the order requires defendant Echavez to post a $500,000 bond before he engages in telemarketing activities in the future. The order further requires the defendants to cease all collection efforts and return any uncashed checks they collected to consumers.

The Commission vote to file each stipulated final judgment was 5-0. The Commission filed the stipulated final judgment against the First Freedom Financial defendants in the U.S. District Court for the Middle District of Florida, Jacksonville Division on January 16, 2003. The court issued this judgment on January 23, 2003. The judgment against the PHD Billing defendants was filed in the U.S. District Court for Central District of California on January 21, 2003.

NOTE: Stipulated final judgments are for settlement purposes only and do not constitute an admission by the defendants of a law violation. Consent judgments have the force of law when signed by the judge.

Copies of the stipulated final orders are available from the FTC's Web site at and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint, or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at . The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

(FTC File Nos. X020050 and X020075; (Civ. Action Nos. 3:02-cv-343-J20TEM and CV 02-2936 RMT (JWJx))