Federal Trade Commission v. Bay Area Business Council
Seventh Circuit
423 F.3d 627 (2005)
Bay Area Business Council, Inc. (defendant) had telemarketers call consumers who had recently been denied a credit card, tell them they were now eligible for a MasterCard and that having one would help their credit rating, and collect their bank information to pay a stated one-time processing fee. BABC then debited more than the disclosed fee and sent consumers not an actual credit card but a stored-value card requiring consumers to preload their own funds and pay a $15 activation fee before use. The FTC (plaintiff) sued for violations of FTC Act section 5(a) and the Telemarketing Sales Rule, and the district court granted the FTC summary judgment.
Whether a telemarketing scheme that misrepresents a product as a credit card, overcharges beyond the disclosed fee, and conceals the product's true nature violates the FTC Act and the Telemarketing Sales Rule.