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We are committed to educating our community members about scams targeting seniors in Santa Clara County; as well as providing up-to-date information offering protection against such scams. This page offers timely data about scams reported, steps to take when targeted, and how to avoid these scams. Guidance is made available as scams are identified.

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FTC Advises of Fraudulent Discount Clubs

Date Published

Tuesday, August 29, 2017

The Federal Trade Commission (FTC) has charged a group of marketers with debiting more than $40 million from consumers’ bank accounts for membership in three online discount clubs they enrolled consumers in without authorization.

As the nation’s consumer protection agency, the FTC takes complaints about businesses that don’t make good on their promises or cheat people out of money.

According to the FTC, the defendants targeted consumers with websites and telemarketing calls that purported to offer payday or cash advance loans. Consumers who though they were applying for loans provided bank account information, which the defendants used to enroll consumers in an online coupon service that cost monthly fees.

The defendants in this 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; Jerry L. Robinson; Earl G. Robinson; James McCarter; Mark Ward; iStream Financial Services Inc.; Kris Axberg; Richard Joachim; and Chet Andrews.

The FTC alleges that the defendants used electronic remotely created checks (RCCs) to withdraw from consumers’ accounts an initial fee ranging from $49.89 to $99.49, and recurring monthly fees of up to $19.95.

Consumers called the defendants to cancel their memberships and request refunds, and thousands of people informed their banks about the unauthorized debits. Throughout the operation of the discount clubs, banks rejected more than 75 percent of the attempts to debit consumers’ accounts. More than 99.5 percent of those who supposedly enrolled in the scheme never accessed any of the discount clubs’ coupons.

The alleged scheme began in 2010, when EDebitPay LLC (EDP), Dale Paul Cleveland, and William R. Wilson launc were facing contempt charges for violating a 2008 settlement order with the FTC in another deceptive debiting scam. Throughout the following years, EDP was sold and recreated multiple times, in newer versions.

iStream Financial Services, Inc. processed all of the payments for the discount clubs from November 2010 through April 2016.

The FTC charged all of the defendants with violating the FTC Act, among other various charges.

The Federal Trade Commission works to promote competition, and to protect and educate consumers. Learn more about consumer topics and file a consumer complaint online at https://www.ftccomplaintassistant.gov or by calling (877) FTC-HELP—(877)382-4357.

Protect yourself from marketing scams. Speak with a Community Resource Specialist of Sourcewise: (408) 350-3200, option 1.