November 3, 2009
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News: FTC Files Suit Against LowPay
The U. S. Federal Trade Commission (FTC) filed suit against a Beaverton, Oregon firm that has been marketing a so-called prepaid credit card offer which is in actuality nothing more than an illegal payday loan scam. The lawsuit which was filed in the U.S. District Court in Portland alleges that Low Pay Inc. deceptively marketed the credit card for individuals with bad or no credit to be used for the purchase of goods in its catalog. Additionally, the suit says the defendants failed to honor its refund policy and charged deceptive and unfair fees of nearly $400. The so called catalog company apparently mailed out over 60,000 of the fraudulent credit card offers targeting individuals experiencing credit problems.
The lawsuit accuses Low Pay and other named defendants of violating federal trade and telemarketing laws. Included in the catalog mailers was a Pre-Approved credit card offer that was guaranteed to build the customer's credit. The offer also came with a guaranteed $7,500 credit line with a cash advance benefit. The catch was that the credit card could only be used to pay for a portion of their purchases made through the Low Pay's catalog. The ambiguous terms of the offer ended up costing the victims $79 in processing fees, a $120 activation fee, a $198 annual fee, and shipping costs along with 30 percent of the products purchase price all of which were deducted from the victims' bank accounts. Additionally, the so called cash advance was nothing more than a payday loan from a third-party. Furthermore, he company's claim to help the customer rebuild his credit could not be fulfilled since Low Pay did not report to any credit reporting bureau.
The defendants also promised to refund the $120 activation fee within 30 days upon receipt of the returned catalog and card; however, the company did not send the items out prior to the 30 day deadline. Low Pay has voluntarily agreed to cease solicitation for the credit card offer or any of the practices outline in the suit pending the outcome of a trial; however, the FTC has asked that the company be permanently stopped. Also named in the complaint was Afrasiabi's partner, Ramin Rahimi. The company did business as LPC Inc., lowpaycard.com, mylpcard.com, LP Capital Holdings Inc., and Century Luxury Inc. of Los Angeles.