A federal district court judge has ordered a deceptive marketing operation to pay more than $3.7 million as part of a contempt action for violating a 2008 court order and conducting an alleged scam the Federal Trade Commission says involved selling a bogus “$10,000 credit line“ that was really an online shopping club membership and a “no cost“ prepaid debit card with hidden fees.
In 2008, Dale Paul Cleveland, William Richard Wilson, EDebitPay LLC, and three now-defunct companies paid more than $2.2 million to settle FTC charges that they made unauthorized debits from consumers' bank accounts and deceptively marketed prepaid debit cards and short-term loans. The parties involved were banned from making future misrepresentations or unauthorized debits.
However, in marketing a “$10,000 credit line,“ FTC alleged the defendants violated the order and misrepresented that they were offering a general line of credit, when they in reality were offering a shopping club membership with a credit line that could be used only to buy merchandise from the club.
Instead of clearly stating what they were selling, “the defendants buried the truth in fine print,” FTC said in a release.
The court held the defendants in contempt of the 2008 order and imposed a $3.7 million fine, which promoted the defendants to file a notice of appeal.