Skip to: Content
Skip to: Site Navigation
Skip to: Search


FTC cuts off 'Rachel from Cardholder Services'

Five companies behind the 'Rachel from Cardholder Services' scheme and other credit card robocalls were shut down Thursday, the FTC announced. The FTC estimated that the companies had defrauded customers out of more than $30 million by promising to lower credit card interest rates in exchange for an up-front fee.

By Contributor / November 2, 2012

The FTC announced Thursday that it had shut down five companies engaged in credit card robocalls, including "Rachael from Cardholder Services" scheme. Here, a woman checks her phone before going into the Times Square subway station in New York.

Carlo Allegri/Reuters


Maybe you've gotten this call before, or one like it: "Hi, this is Rachel from Cardholder Services ... contact us concerning your eligibility for lowering your interest rates."

Skip to next paragraph


Jeff began writing for the Monitor's Horizons blog in 2011, covering product news and rumors, innovations from companies like Apple and Google, and developments in tech policy.

Recent posts

The call, according to the Federal Trade Commission, is a scam. "Rachel" won't do anything but transfer you to a telemarketer who will promise to lower the interest on your credit card -- in exchange for an upfront-fee somewhere between several hundred dollars and $3,000. 

The FTC is putting a dent in those automated call. The agency announced on Thursday that it has shut down five robocall companies that participated in the "Rachel" scheme. The companies had defrauded more than 30,000 customers for a haul of more than $30 million by promising nonexistent services, the FTC said at a Chicago press conference.

The five companies are all facing complaints in US District court, where they're accused of making deceptive sales claims and violating robocalling laws. (In some cases, robocalling is okay -- such as for political campaigns and charity drives -- but credit offers aren't allowed.) The law also prohibits telemarketers from charging people money up front in exchange for a promise to reduce debt.

"At the FTC, Rachel from Cardholder Services is public enemy number one,” said FTC Chairman Jon Leibowitz in the FTC's press release.

The agency also noted that it's been getting more than 200,000 complaints each month about automated telemarketing calls, including those from "Rachel." Some telemarketers at the companies in question, it added, even promised consumers they could pay off their credit card balances two to three times faster by lowering their interest rates.

After collecting their fees, most companies don't do anything to actually lower consumers' interest rates. One of the only services actually rendered, the FTC said, is a three-way call between the telemarketer, the consumer, and the credit card company. The telemarketer requests for the credit card interest rate to be reduced -- "a request that consumers could make on their own and that invariably is denied," the agency noted.

This isn't the first time the FTC has moved to crack down on these kinds of schemes. It had filed 12 cases against robocall operators before Thursday, including groups running credit card scams. But there's more to be done, still: the five companies shut down today outsourced their calls to other companies that have the technology to make millions of robocalls a year. It'll be tough to shut down not only the telemarketers who tricked consumers, but the companies who are actually responsible for making the calls.

In the meantime, though, those who have been ripped off can breathe easier: the FTC has frozen the five companies' assets, and says defrauded consumers will get their money back.

Have you gotten calls from "Rachel" before? Share your experience in the comments section below.

[Editor's note: The original version of this story misstated that the five companies face "criminal" complaints.]


Read Comments

View reader comments | Comment on this story

  • Weekly review of global news and ideas
  • Balanced, insightful and trustworthy
  • Subscribe in print or digital

Special Offer


Doing Good


What happens when ordinary people decide to pay it forward? Extraordinary change...

Danny Bent poses at the starting line of the Boston Marathon in Hopkinton, Mass.

After the Boston Marathon bombings, Danny Bent took on a cross-country challenge

The athlete-adventurer co-founded a relay run called One Run for Boston that started in Los Angeles and ended at the marathon finish line to raise funds for victims.

Become a fan! Follow us! Google+ YouTube See our feeds!