The Federal Trade Commission is sending more than $700,000 in refund checks to people who lost money in a "Rachel from Cardholder Services" scheme that promised to reduce the interest rate on consumers' credit cards for an upfront fee. The refunds are going to 16,590 people, with each check totaling an estimated $42.

The refunds are the result of funds collected through two 2013 settlements. A November 2013 settlement involved Emory L. "Jack" Holley IV, Lisa Miller and six corporate defendants they controlled - including ELH Consulting d/b/a Proactive Planning Solutions and Purchase Power Solutions LLC. A June 2013 settlement involved four other defendants, including Key Tech Solutions LLC, d/b/a Key One Solutions, and 3Point14 LLC, d/b/a Elite Planning Group.

The FTC banned the companies, primarily based in Florida and Arizona, in late 2012, after alleging the firms were responsible for millions of illegal pre-recorded robocalls. The defendants placed automated calls to consumers, typically with a prerecorded message from “Rachel” or someone else from “Cardholder Services" purporting to have an “important message” regarding an opportunity to reduce high credit card interest rates. 

In general, the calls began by asking consumers to press number one to connect with a live representative, or press number two to discontinue getting such calls. Consumers who pressed one were connected to live telemarketers. 

In many cases, the name displayed on the Caller ID is so generic, such as “Card Services,” that it provided little information about the caller.

According to the FTC, consumers reaching a live telemarketer were pitched deceptive offers to have their credit card interest rates reduced, sometimes to as low as 6.9% or even 0%. The telemarketers allegedly guaranteed that lowering card interest rates would save the consumers thousands of dollars in finance charges in a short period of time and allow them to pay off the balances faster. 

Some telemarketers claimed that consumers would save at least $2,500 in finance charges and be able to pay their balances two to three times faster, without raising their monthly payments.

After consumers were “approved”, the telemarketer informed them of an upfront fee, typically ranging from several hundred dollars to nearly $3,000. To convince them to pay, the telemarketers often would say that it will be more than offset by the money the consumer would save.

In some cases, the FTC alleged that consumers’ credit cards were charged even if they did not agree to pay for the service. In other cases, the defendants allegedly did not disclose a fee at all, or claimed there will be no fee.

Analytics, the redress administrator for the refunds, will mail checks to eligible consumers this week. The checks must be cashed within 60 days of the date they are issued or they will become void.


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