The operator of a new Silver Spring company soliciting consumers nationwide with postcards offering low-rate credit cards says he doesn't know his firm will be affected by a federal suit filed against similar operators yesterday by Visa International and MasterCard.
"This is all very interesting to me. . . . This is all occurring so very quickly," said Bill Matney of Twinstar International. "My company is relatively new. I'll have to talk to my distributor."
Matney also said he would contact his attorney to find out how the Visa/MasterCard suit might affect his firm.
"I'm reserving comment until I find out more information from my attorney," he said.
Twinstar has not posted a $10,000 bond required to operate a credit services business in Maryland, according to Office of the Commissioner of Consumer Credit.
George Jones, head of the commissioner's office, said he sent Twinstar a letter Friday advising it that it had to post the required bond.
Failure to post the bond subjects a company to legal liability with consumers, Jones said. If it continues to operate after receiving the state notice, it would be subject to criminal liability.
Matney said yesterday that Twinstar opened its doors April 1 and that he had been unaware of the state law. He said he would "absolutely, fully and whole-heartedly" comply with the requirement.
Twinstar markets a program called International Consumer Society through targeted mailings of postcards saying: "A Visa/MasterCard with an interest rate of 11.88% is available to you" and urging the recipient to call within 48 hours.
For a fee of $179.95, Matney said, the company provides a customer with a list of banks that offer low-interest-rate credit cards.
It also includes a five-year membership in ICS with 18 other benefits, including discounts on prescriptions, eyewear, hotels, airline tickets, a free cellular phone that requires a $50 activation fee, and vacation certificate.
Buyers can pay Twinstar by personal check, money order or by charging the fee to a Visa or MasterCard.
A telephone salesman for Twinstar had claimed that company had been around for a long time, belonged to the Better Business Bureau and worked closely with Visa and MasterCard, but Matney said none of that is true.
International Consumer Society, he said, is a Pennsylvania-based company that sells its program to distributors such as himself.
"I keep a tight handle on my presentation. He [a customer] has to have a clear understanding that he's not getting a credit card," Matney said.
Matney said he was aware of critics' charges that many credit-marketing schemes are merely a list of banks at inflated prices.
But he said his program offered much more and he was confident that his package more than justified its price.
"They're looking at an isolated piece of the pie. The package which I market is over 300 pages and includes a video tape and audio tape. It has 18 other benefits [besides the list of banks] and includes a certificate for a cellular car phone," he said.
Matney said the benefits offered by ICS were readily available and not so encumbered by restrictions as to make them virtually useless.
Mary Beth Butler of Bankcard Holders, a consumer watchdog group, said she had reservations about Twinstar's approach.
"My main concern in that they're using [post] cards that have been described as misleading by other attorneys general," she said.
Salesmen manning the 800 number at Twinstar talk with customers only if they provide their name, home phone number and the control number printed on the postcard.
In a phone call by a reporter, the salesman asked for the caller's current credit card interest rate, her credit limit and monthly payment. Then he said the ICS program could definitely help reduce interest costs.
The customer, he said, would receive a "confidential" list of 17 banks with low-rate cards, most with no annual fee.
"Understand we are not a bank," the salesman said. "We act as a reference point."
When questioned, he said the interest rates of the 17 banks ranged from 11.88 to 16.1 percent but added the caller was pretty sure to get a card at the low end of the range.
"Your acceptance is guaranteed," he said, adding that if the caller got three rejections and mailed them to Twinstar, a refund would be issued.
Butler of Bankcard Holders said a company that is not a credit card issuer cannot guarantee acceptance.
"They have no way of knowing the chances of the consumer getting a Visa or MasterCard because they cannot access the consumer's credit file," she said.
Matney agreed that only a credit card issuer could promise acceptance, but said he offered a "reverse guarantee" and would happily refund the fee to a customer who received three rejections from the banks on his list.