## Facts

- A group of related companies and individuals marketed a product described in telemarketing calls as a “MasterCard” to consumers who had recently been denied conventional credit cards.
- Telemarketers used scripted calls stating that the consumer was “eligible” to receive a MasterCard and that obtaining it would be good for the consumer’s credit rating.
- Callers obtained consumers’ bank account information and represented that only a one-time processing fee would be charged.
- Consumers’ accounts were debited shortly after the calls, including amounts exceeding the represented processing fee.
- Consumers received a card bearing the MasterCard logo, but it was not a traditional credit card; it functioned as a stored-value card usable only after consumers loaded their own funds.
- An additional $15 activation fee was required before the card could be used, and this fee was not clearly disclosed during the telemarketing pitch.
- An automated recording at the end of the call provided disclosures and asked for an acknowledgment of agreement.

## Issues

1. Whether marketing a stored-value card as though it were a conventional MasterCard credit card, to consumers recently denied credit, constituted deception under § 5(a) of the Federal Trade Commission Act.
2. Whether failure to clearly and conspicuously disclose the $15 activation fee and other material limitations violated the Telemarketing Sales Rule’s disclosure requirements.
3. Whether the district court properly entered summary judgment and ordered a permanent injunction and monetary consumer redress under 15 U.S.C. § 57b(b).

## Decision

- The Seventh Circuit affirmed summary judgment for the FTC.
- The court held the telemarketing practices were deceptive under § 5(a) and violated the Telemarketing Sales Rule, including the requirement to disclose all material costs.
- The court concluded the automated disclosure did not cure the misleading net impression created by the sales script and the timing of obtaining bank information.
- The court upheld the permanent injunction and monetary consumer redress, finding the remedies authorized and supported by the record.

## Legal Principles

- A practice is deceptive under § 5(a) if it is likely to mislead consumers acting reasonably under the circumstances and the misrepresentation or omission is material.
- Liability may rest on the “net impression” of a solicitation; the FTC need not prove every consumer was actually misled.
- The Telemarketing Sales Rule requires clear and conspicuous disclosure of all material costs before a consumer pays; failure to disclose an additional required fee violates the rule.
- Under 15 U.S.C. § 57b(b), a court may order equitable monetary relief for consumers and injunctive relief to prevent future deceptive practices when statutory requirements are met.

## Conclusion

The Seventh Circuit affirmed that presenting a prepaid stored-value product as a conventional credit card and omitting material fees constitutes actionable deception under federal law, and it sustained both injunctive restrictions and consumer redress awarded to remedy and prevent similar telemarketing misconduct.


Fed. Trade Comm'n v. Bay Area Bus. Council, Inc., 423 F.3d 627 (7th Cir. 2005)