The Federal Trade Commission (FTC) won a big victory last month. A federal judge ruled that three credit repair telemarketers -- AMS Financial, Rapid Reduction and PDMI -- must shut down their operations.

The three companies, which are based in Washington and Texas, all operated by bombarding consumers with robocalls, even if those consumers were on the National Do Not Call Registry or had specifically requested not to be called. Most telemarketing robocalls are prohibited without a consumer's express written consent.

Worse, the companies promised desperate consumers that they could reduce their credit card interest rates and help with credit repair. The deal they offered was that, in exchange for up-front fees ranging from $499 to $1,590, they would help them reduce their interest rates.

There was no real risk to the consumer, they promised, because if they didn't save at least $2,500 through credit card rate reductions they could "earn back" 100% of their up-front fee.

According to the FTC, their promises were false. Instead of contacting credit card companies and negotiating for lower rates, the three companies simply produced consumer information on how to pay off your credit cards early. The companies also misled consumers about their refund policies, which were strictly limited.

It's good news that regulators are taking notice of credit correction scams, although it is too late for consumers fleeced by AMS, Rapid Reduction and PDMI.

FBI Tips on How to Avoid Being a Victim of Credit Card Fraud

Never pay for services in advance. Unlike products, the vast majority of legitimate services require no up-front fee.

Never buy from an unfamiliar company. A legitimate business will be happy to provide you with more information about their company.

Check out unfamiliar businesses with the Better Business Bureau, the National Fraud Information Center, your state's Attorney General or a local consumer protection agency.

Get identifying information and verify its accuracy before transacting any business. Whether you're dealing with a telemarketer or working with someone in person, get the salesperson's name, the name of the business, their street and mailing addresses, their telephone number and their business license number. Keep in mind that con artists often give out false information -- follow through and check the information out.

Related Resource:

"FTC Cracks Down on Credit Card Rate Scams" (MainStreet.com, June 22, 2010)