PHOENIX (CN) – Federal prosecutors say Phoenix-based Direct Marketing Associates scammed consumers with direct mailers that claimed they had been pre-approved for car loans. But John M. Rainey Jr., who ran the company, had no such agreement with any finance company, and the so-called finance companies mentioned in the mailers were not “functioning,” or registered, or licensed, according to the complaint.
Direct Marketing Associates contracted with “automobile dealers to mail one or more solicitations for the purchase of automobiles to consumers who meet certain demographic … criteria,” according to the complaint. The mailings were not true offers of credit, but were intended to lure consumers in the dealers’ showrooms, prosecutors say.
“The solicitations prepared and disseminated by DMA state that a named finance entity, such as ‘Evergreen Automotive Acceptance,’ has ‘pre-approved’ the consumer receiving the solicitation for a loan to purchase a vehicle at the automobile dealer identified in the solicitation,” the complaint states. “In numerous instances these solicitations are signed by defendant Rainey. The solicitations instruct consumers to contact or visit the automobile dealers identified in the solicitations.”
However, prosecutors say, “In truth and in fact, the consumers receiving the solicitations have not been pre-approved for automobile financing. The finance companies identified in DMA’s solicitations, such as ‘Evergreen Automotive Acceptance,’ are not functioning finance companies, are not registered or licensed as required by law in numerous states where DMA has disseminated solicitations, and have not made financing available to the consumers who received the solicitations. Defendants had no arrangement or agreement with any other party to pre-approve the consumers for automobile financing.”
Direct Marketing Associates got consumer information from a consumer reporting agency, printed the mailers and mailed them, according to the complaint.
Prosecutors seek a permanent injunction and civil penalties for violating the FTC Act and the Fair Credit Reporting Act.