$40 million allegedly swiped from consumers in “bogus discount clubs” scheme

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A group of marketers – including some based in Atlanta — swiped more than $40 million from the bank accounts of consumers for “discount clubs” that the consumers never agreed to join, the Federal Trade Commission says.

The companies got in touch with consumers through websites and telemarketing calls that were selling payday loans and cash advances. Customers who thought they were applying for loans gave out their bank account information.

The companies used that personal financial information to enroll consumers in costly “discount clubs” that debited bank accounts for initial fees of $49.89 to $99.49.

After the initial fee, the companies would also take monthly charges of $14 to $19.95, according to the FTC complaint, filed in federal court in Atlanta.  Hundreds of thousands of customers got caught up in the scam, according to the FTC, and called the companies to try to cancel, saying they’d never signed up in the first place.

The FTC says the scams operated under different names: “Savings Pays Club” and “Money Plus Saver” and “Saving Makes Money.” But there wasn’t much “saving” for those who got scammed: more than 99 percent of the people enrolled in the clubs never accessed a single coupon, according to the FTC complaint.

The discount clubs scheme began in 2010, according to the FTC, when a company called EDebitPay  and two executives launched the Saving Pays Club. This group was already in trouble with the FTC for violating a settlement over another debiting scheme.

In 2013, EDebitPay sold its assets to Hornbean Special Situations, a company that operates from an office on Peachtree Street in Atlanta. Hornbean launched its own club and continued to charge the customers that EDebitPay had placed in its “clubs.”

Defendants named in the FTC complaint include Hornbeam executives Jerry L. Robinson and Earl G. Robinson of Atlanta and James McCarter of Alpharetta. Other defendants in the case are EDP; Dale Paul Cleveland; William Wilson; Keith Merrill; clickXchange Media LLC; Platinum Online Group LLC, doing business as Premier Membership Clubs; Hornbeam; Cardinal Points Holding LLC; Cardinal Points Management LLC, doing business as Clear Compass Digital Group; Gyroscope Management Holdings LLC; Mark Ward; iStream Financial Services Inc.; Kris Axberg; Richard Joachim; and Chet Andrews.

All of the defendants are charged with violating the FTC Act. The action was filed in the U.S. District Court for the Northern District of Georgia, Atlanta Division.

The FTC is seeking to force the companies to repay consumers.

Related to this lawsuit, the FTC also posted this information on how to prevent unauthorized charges: https://www.consumer.ftc.gov/blog/payments-you-didnt-authorize-could-be-scam 


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