A federal district court judge ordered a marketing operation to pay more than $3.7 million as part of a contempt case for violating a 2008 court order.
The Federal Trade Commission alleged that the defendants targeted consumers who were unemployed or had poor credit, selling a bogus "$10,000 credit line" that actually was an online shopping club membership and a "no cost" prepaid debit card with hidden fees.
Dale P. Cleveland, William R. Wilson, EDebitPay LLC and three now-defunct companies paid more than $2.2 million in 2008 to settle FTC charges that they made unauthorized debits from consumers’ bank accounts and deceptively marketed prepaid debit cards and short-term loans.
The settlement order permanently barred them from making future misrepresentations or unauthorized debits. But in marketing a "$10,000 credit line," the FTC alleged that the defendants violated the order and misrepresented that they were offering a general line of credit, when they were actually offering a shopping club membership with a credit line could be used only to buy merchandise from the club.
Instead of clearly disclosing what they were actually selling, the defendants buried the truth in fine print. The FTC also charged the defendants with marketing the "no cost" prepaid debt card that carried a variety of undisclosed fees.
The contempt order issued by the judge was entered by the U.S. District Court for the Central District of California. The defendants have filed a notice of appeal of the order. They could not immediately be reached for comment.