‘Discount Clubs’ Scheme Costs Consumers Over $40 Million

A group of marketers swiped more than $40 million from the bank accounts of customers for “discount club” memberships they never agreed to join, according to a complaint filed by the Federal Trade Commission (FTC).

According to news from, the companies contacted consumers through websites and telemarketing calls that were selling payday loans and cash advances. Customers who thought they were applying for loans gave out their bank account information. The companies then used that information to enroll consumers in costly “discount clubs” that debited bank accounts for initial fees of $49.89 to $99.49.

After the initial fee, the companies would continue to take monthly charges of $14 to $19.95, according to the FTC complaint, filed in federal court in Atlanta. Hundreds of thousands of customers got caught up in the scam and called the companies to try to cancel. In fact, more than 99 percent of the people enrolled in the clubs never accessed a single coupon.

The FTC says the scams operated under different names: “Savings Pays Club” and “Money Plus Saver” and “Saving Makes Money.” The discount clubs’ scheme began in 2010, when a company called EDebitPay and two executives launched the Saving Pays Club. This group was already in trouble with the FTC for violating a settlement over another debiting scheme.

In 2013, EDebitPay sold its assets to Hornbeam Special Situations, which launched its own club and continued to charge the customers that EDebitPay had placed in its “clubs.”

Defendants named in the FTC complaint include Hornbeam executives Jerry L. Robinson and Earl G. Robinson of Atlanta and James McCarter of Alpharetta, Georgia. Other defendants in the case are EDP; Dale Paul Cleveland; William Wilson; Keith Merrill; clickXchange Media LLC; Platinum Online Group LLC, doing business as Premier Membership Clubs; Hornbeam; Cardinal Points Holding LLC; Cardinal Points Management LLC, doing business as Clear Compass Digital Group; Gyroscope Management Holdings LLC; Mark Ward; iStream Financial Services Inc.; Kris Axberg; Richard Joachim and Chet Andrews.

All of the defendants are charged with violating the FTC Act. The FTC is seeking to force the companies to repay consumers.


New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.

Click to comment