nfortunately, some merchants in this country are up to no good, and the Federal Trade Commission (FTC), a federal agency working to protect consumers and ensure a competitive market, keeps a close watch on shady businesses. The FTC will investigate suspicious individuals and companies, and ultimately might charge some with using deceptive business practices and violating federal law.

No ISO/MSP wants to go through having one of its merchants shut down by the FTC. This often creates a chargeback nightmare and might even require the ISO/MSP to retain counsel to protect its reserve accounts from being attached as one of the merchant's assets. The FTC will often develop a refund plan for the consumers, whom the ISO/MSP might already have "refunded" by way of a chargeback.

The more you know about how unscrupulous businesses operate, the more you can do to protect your own business. Following are some recent FTC cases to make note of:

U.S. Postal Service Jobs Scam

In August, the FTC announced that it charged Sean Terrance Asberry and his three companies, National Testing Services LLC; Exam Preparation LLC; and Future Planning LLC, doing business as Exam Prep LLC and Registration Department, with allegedly promoting a fraudulent U.S. Postal Service employment program that offered to help people get jobs with the service.

According to the FTC, the program guaranteed job placement with the Postal Service if "applicants" could score well on its entrance exam. However, no job opportunities were really available through what the FTC called an "employment-opportunity scammer."

The defendant and his three companies placed the types of classified ads often seen in newspapers across the country, which read "$ ATTENTION $ Now Hiring for Postal Jobs." The ads offered hourly salary rates, paid training and full benefits.

When people called the toll-free numbers listed in the ads, the companies told them no jobs were available at the local post office; instead they offered help in getting a job there if they paid a "one-time refundable fee" to cover the cost of an exam-preparation package. The companies told people that if they scored well on the exam, they would receive immediate job placement. The FTC filed a complaint, asking for consumer redress and to "stop the defendants' allegedly false and deceptive selling practices."

This action by the FTC usually stops a company from doing business, and generally results in chargebacks of the credit card transactions processed in the last four to six months. The FTC published a brochure on this scam, "Federal and Postal Job Scams: Tip-offs to Rip-offs," which is available at www.ftc.gov/bcp/conline/pubs/alerts/fedjobs.htm . For more information about the case, visit http://ftc.gov/os/caselist/nationaltesting/nationaltesting.htm .

Marketer of "Free Credit Reports" Settles FTC Charges

Also in August, Consumerinfo.com Inc., doing business as Experian Consumer Direct, settled FTC charges that it allegedly marketed "free credit reports" to people, not adequately disclosing that it would also sign them up for a credit report monitoring service and charge them nearly $80 if they didn't cancel the service within 30 days.

This practice violates federal law and is also a violation of card Association rules. According to the FTC complaint, the defendant used radio, television, e-mail and Internet ads to entice consumers to the Web sites www.freecreditreport.com and www.consumerinfo.com . These sites promised free credit reports and free trials of a credit-monitoring service.

However, the sites did not adequately disclose that after the free-trial period expired, the company would charge consumers an "annual membership" unless they notified the company to cancel the service.

As part of the settlement, Consumerinfo must pay redress to deceived consumers. The company was barred from making future misleading claims; it must also give up $950,000 in ill-gotten gains.

The company billed consumers' credit cards, even though it told them providing a credit card number was "required only to establish your account." In some cases, it automatically renewed memberships by re-billing consumers without any notice. The complaint alleges that the defendant misled consumers about their association with the annual free credit report program for which U.S. consumers are eligible under federal law.

According to federal law, consumers have the right to receive one free credit report every 12 months from each of the three national consumer reporting agencies. This program began in the western states on Dec. 1, 2004, and as of Sep. 1, 2005, applies to all U.S. consumers. (Order free copies of your reports by phone, mail, or at the authorized Web site: www.annualcreditreport.com .)

"Consumers also need to be alert about impostor sites, sites that misspell annualcreditreport.com or use sound-alike names, but don't link to the authorized site," Lydia Parnes, Director of the FTC's Bureau of Consumer Protection said.

She said the FTC is sending letters to operators of more than 130 impostor sites to inform them that the agency knows they are out there and that attempts to mislead consumers are illegal. Make sure you're not the ISO/MSP processing for these types of "merchants." For more information about the settlement, visit http://ftc.gov/opa/2005/08/consumerinfo.htm .

The Bartending and Mystery Shopping Program

The FTC charged two individuals and two businesses, with allegedly using deceptive marketing ploys to sell at-home certification programs for bartenders and mystery shoppers and taking more than $5 million from consumers. The agency claims the defendants promised people jobs as bartenders and mystery shoppers, but only delivered "useless certification programs and general information on potential employers."

According to the FTC, the defendants' business activities violated federal law as well as an October 2001 court order entered against them in an earlier FTC case. To settle the charges, one defendant agreed to a lifetime ban from telemarketing. One defendant might have to pay $13.2 million in consumer redress. The FTC Web site offers a search feature to use to check to see if any business owners have ever been under its scrutiny. For more information about this case, visit http://ftc.gov/opa/2005/08/abi.htm .

FTC Wins $10 Million Judgment Against Fraudulent Debt Collectors

In July, the FTC announced that it won its largest judgment ever for violations of the Fair Debt Collection Practices Act (FDCPA). The judgment, against a debt-collection operation called National Check Control and its principals, was for $10.2 million.

The FTC filed its complaint in May 2003, alleging that the defendants violated the FDCPA by "harassing and threatening consumers with claims that they owed money for checks returned for insufficient funds." The defendants made repeated phone calls, sent threatening letters and falsely told consumers that they could face civil or criminal charges if they did not pay the debts. In many cases, the consumers did not owe the money, or owed far less than the defendants claimed.

The defendants are banned from future debt collection practices and from violating the FDCPA, which includes harassing consumers with phone calls, obscene language or threats of legal action; misrepresenting the amount a consumer owes; failing to notify consumers of their right to dispute the debt; and misrepresenting that the person contacting the consumer is a lawyer.

For more information about the case, visit www.ftc.gov/opa/2005/07/nationalcheck.htm .

David H. Press is Principal and President of Integrity Bankcard Consultants Inc. Phone him at 630-637-4010, e-mail dhp@integritybankcard.com or visit www.integritybankcard.com