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CardReady fined, banned from doing business by FTC in debt relief scam

Wednesday, November 30, 2016 — 13:33:52 (EST)

Washington, Nov. 30, 2016 -- A group of defendants who falsely promised to reduce consumers’ credit card interest rates will be banned from telemarketing and from selling debt relief services, and the payment processors who enabled them to bilk more than $12 million from consumers will be banned from the payment processing industry under settlements with the Federal Trade Commission and the State of Florida. The settlements resolve the action brought by the agencies against the two groups of defendants in 2015 and 2016.

“Working with the Florida Attorney General’s office, the Federal Trade Commission has stopped yet another telemarketing scam that offered bogus solutions to relieve credit card debt,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection. “People should just hang up the phone when they get this kind of offer.”

According to the agencies, the debt relief defendants – Steven D. Short and his wife, Karissa L. Dyar, E.M. Systems & Services LLC, Administrative Management & Design LLC, Empirical Data Group Technologies, LLC, Epiphany Management Systems, LLC, and KLS Industries, LLC, doing business as Satisfied Service Solutions, LLC – called debt-laden consumers and said that, for an up-front fee that averaged from $695 to $1,495, they would reduce consumers’ interest rate and save them thousands of dollars. The defendants promised refunds if they failed, but the consumers did not receive the promised results or refunds, and instead became deeper in debt.

The agencies also alleged that these defendants, along with payment processors – CardReady LLC and its executives, Brandon A. Becker, James F. Berland and Andrew S. Padnick – arranged for at least 26 shell merchants to be used to process credit card payments for the debt relief scam. CardReady and its executives allegedly solicited “straw men,” created shell companies on their behalf, and submitted falsified merchant applications in order to launder the transactions. The agencies charged them with credit card laundering under the Telemarketing Sales Rule (TSR), and illegal factoring of credit card transactions under Florida law. They also charged CardReady and its executives with assisting and facilitating the debt relief scam.

In addition, the agencies alleged that telemarketing company One Easy and its principals, Christopher Miles, Jason Gagnon and Matthew Thomas, violated the FTC Act, the TSR, and the Florida Deceptive and Unfair Trade Practices Act.

The settlements resolve the charges against all defendants but one in this matter. Litigation continues against Kenneth Sallies, a One Easy principal who telemarketed the debt relief scam according to Plaintiffs’ allegations.

The stipulated order against E.M. Systems & Services LLC, Steven D. Short, Karissa L. Dyar, Administrative Management & Design LLC, Empirical Data Group Technologies, LLC, Epiphany Management Systems, LLC and KLS Industries, LLC imposes a judgment of more than $12.3 million that will be partially suspended upon the surrender of frozen assets. The order bans them from selling debt relief services, outbound telemarketing, credit card laundering, and acting as an ISO or sales agent, and prohibits them from misrepresenting any product or service, including making unsubstantiated claims.

The stipulated order against CardReady LLC, Brandon A. Becker, and James F. Berland imposes a judgment of more than $12.3 million that will be partially suspended upon payment of $1.8 million to the FTC and the State of Florida. The order against Andrew S. Padnick imposes a $437,199 judgment that will be partially suspended upon payment of $5,945 to the FTC and the State of Florida. The orders also ban CardReady LLC, Becker, Berland, and Padnick from working in the payment processing industry and helping others violate the FTC Act, the TSR, and the Florida Deceptive and Unfair Trade Practices Act (FDUTPA).

The stipulated orders against One Easy and Miles, Gagnon, and Thomas impose a judgment of more than $2.5 million that will be partially suspended upon payment of about $550 from One Easy’s frozen assets and approximately $6,600 by Miles to the FTC and the State of Florida; Gagnon’s surrender of a 2013 Infinity G37; and Thomas’s surrender of certain jewelry and payment of $10,000. The orders ban these defendants from telemarketing, selling debt-relief products and services, and violating the FTC Act, the TSR, and the FDUTPA.

In each settlement, the full judgment will become due immediately if the defendants are found to have misrepresented their financial condition. The orders also prohibit the defendants from profiting from consumers’ personal information and failing to dispose of it properly.

The Commission votes approving the proposed stipulated final orders were 3-0. The orders against One Easy, Miles, Gagnon and Thomas were filed on November 21, 2016 in the U.S. District Court for the Middle District of Florida, Tampa Division; the other orders were filed on September 14, 2016.

NOTE: Stipulated final orders have the force of law when approved and signed by the District Court judge.

The Federal Trade Commission works to promote competition, and protect and educate consumers. You can learn more about consumer topics and file a consumer complaint online or by calling 1-877-FTC-HELP (382-4357). Like the FTC on Facebook (link is external), follow us on Twitter (link is external), read our blogs and subscribe to press releases for the latest FTC news and resources.

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Source: Company press release.