Milwaukee, Wis., Feb. 15, 2011 –
Some Internet discount clubs that promise to save members hundreds of dollars a month on purchases ranging from computers to pizza are under attack from consumers who say the clubs took money from their bank accounts after they applied for online loans.
The Better Business Bureau (BBB) suggests extreme caution when dealing with any online loan business that asks for bank account numbers. More than 600 consumers in 44 states have filed complaints against Liberty Discount Club
of Scottsdale, Ariz., in the past 12 months. Most complainants said they never intentionally enrolled in the club. Many said they never heard of the company until they noticed money missing from their bank accounts.
Another Scottsdale business, 777 Discount Club
, also known as 777 Web Discount Club
, is the focus of similar complaints from consumers. The BBB says it has closed more than 270 complaints against that business in the past 12 months.
Both Liberty Discount Club and 777 Web Discount Club have “F” grades with the BBB, the lowest grade possible. Both have ties to Scottsdale businessman Moe Tassoudji.
“It should be criminal,” said a housewife from Bellflower, Mo., in Montgomery County, west of St. Louis. She said Liberty Discount Club took money from her bank account without her OK. “They got into my account and stole $50. This happened so fast.”
The BBB in Phoenix reports that Liberty Discount Club failed to respond to more than 500 of the complaints. Fifty California residents filed complaints. Ohio was next with 41 complaints; Pennsylvania had 40; Texas, 39, and Florida, 37. Eleven of the complaints came from Wisconsin.
Randall Hoth, Wisconsin BBB president and CEO, said many consumers filing complaints already are facing economic crises.
“Nearly all of them are people who are desperate to take out high-interest online loans simply to survive,” Hoth said. “For a business to use that vulnerability to victimize them again is reprehensible.”
Many Liberty Discount Club complainants said they went online either to search for loan information or to apply for loans. They said they had no interest in enrolling in a discount club and did not know they were enrolled until they found money taken from their bank accounts.
Several said they had dealt with a company called Last Chance Cash Advance
of Manchester, Tenn. The firm has an “F” grade with the BBB. Several consumers who contacted Last Chance Cash Advance said Liberty Discount Club or related businesses debited their bank accounts. Others said they were charged by an ID theft protection company, even though they did not intend to contract with that company.
Consumers accessed the Last Chance Cash Advance site through the website of Amnesty Financial
of Indianapolis, Ind. That company has a “D” grade with the BBB. Mail sent to Amnesty Financial was returned, marked “insufficient address.” A Phoenix BBB report said Amnesty Financial was using the BBB Accredited Business logo even though it was not a BBB accredited business. The logo was still on the site last week.
A woman from Bonne Terre, Mo., said she applied for a loan through Last Chance Cash Advance only to have money debited from her account by Liberty Discount Club. “Next thing I know, $34.19 has been deducted from my checking account which causes four of my checks to bounce and $140 in overdraft fees. I need to know why these two businesses are still being allowed to operate.”
A St. Louis woman said Liberty Discount Club took $40 from her bank account after she applied for an online loan. “I called Liberty and asked who gave them authorization to do that,” she said. She said she told a company representative, “I don’t even know who you are.” She said she never again will give out her banking information online. “You never know what you’re signing up for.”
A woman who identified herself as Erin Sullivan, a supervisor at Liberty Discount Club, told the BBB that Liberty operates a “cross sales” business with online loan sites.
She said consumers applying for loans must specifically opt out of membership or they are enrolled automatically. If they do not respond to a follow-up e-mail allowing them to withdraw, their accounts are charged, she said. She acknowledged a problem with the system and said, ”We’re planning to fix the website.”
The Liberty Discount Club website shows a woman holding an infant and a bag of groceries. “How this Mom saved $100s per Month,” the site says. The club says it works with more than 150,000 brand-name stores and offers discounts for dining, shopping, entertainment and communication items.
A testimonial says, “We Saved $356 This Month” and shows a photo of a young African-American couple. They are identified as Sarah and Rob Jones of Burlington, N.C.
The same family photo, names and testimonials are also used for a variety of other online discount club sites, including Discount Club 247, Key Discount Club, Saving Club 247, Web Savings Club, Your Local Savings Club and Unlimited Local Savings. The same testimonial also is used for a discount club called Perks 2 U. In that case, however, Sarah and Rob Jones are pictured as a young Caucasian couple.
The BBB offers several suggestions for consumers searching for online loans:
- Because these short-term loans almost always carry high interest rates, you might want to exhaust other alternatives before applying.
- Never pay an advance fee in exchange for a promise of a loan. These are almost always scams and, once you have paid, you likely will never hear from the thieves again.
- Be extremely cautious when giving out any personal information online, such as Social Security and bank account numbers, especially to companies you do not know. Be alert for websites that force you to give that information before even telling you whether you qualify for a loan.
- Read all information on the site very carefully, searching for hidden fees or disclaimers. Often, a company’s “Terms and Conditions” can be several pages long and contain critical information for consumers.
- Understand that many disreputable companies exaggerate or entirely fabricate testimonials. Be suspicious of testimonials and ask for references you can call and speak with.
- Contact the Better Business Bureau for Reliability Reports on businesses by going to www.bbb.org or by calling 414-847-6000 (metro Milwaukee), 920-734-4352 (NE Wisconsin) or 800-273-1002 (elsewhere in Wisconsin).