Web Scammers Agree to Pay $815,000

The promoters of a Web-based pre-approved credit card scam agreed Monday to pay $815,000 to settle Federal Trade Commission (FTC) charges of deceptive trade practices. Texas-based ClickForMail.com, Inc., doing business as AllPreApproved.com, and Harvey B. Vaughn, III, were part of the FTC’s Southwest Netforce May dragnet that targeted Internet scammers and deceptive spammers.

In addition to paying redress, the settlement prohibits the defendants from making any false claims to consumers in the future.

The FTC alleged that the defendants sent spam email telling consumers they were approved and guaranteed to receive major, unsecured credit cards with credit limits up to $5,000 for an advance fee of $49.95. According to the FTC, however, consumers who paid the fee did not receive the promised card.

Instead, they allegedly received access to a set of hyperlinks to companies where consumers could apply for credit cards, and even then those were generally for secured credit cards, stored-value cards, or catalog charge cards.

The proposed settlement announced Monday prohibits the defendants from making false claims that they will provide or arrange for consumers to receive major credit cards; have arrangements with banks or financial institutions to offer credit to consumers; or will provide consumers with any credit-related products, programs, or services.

The settlement also prohibits the defendants from misrepresenting any material fact prior to a consumer’s purchase of any products, programs, or services; assisting others who engage in any activity that may violate the order; and selling their customer lists. In addition to the defendants paying redress, the settlement contains an avalanche clause that requires the defendants to pay $3.6 million if the court finds that they materially misrepresented their financial status to the Commission.

The FTC noted that the stipulated permanent injunction and final judgment is for settlement purposes only and does not constitute an admission by the defendant of a law violation. Stipulated final orders have the force of law.