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Electronic Clearing House Settles FTC Charges

REGIONAL ROUNDUP

December 28, 1993

Electronic Clearing House Inc., an Agoura Hills company that provides check and credit card clearing services, has agreed to settle Federal Trade Commission charges that it aided and abetted deceptive prize-promotion telemarketers.

The FTC said that Electronic Clearing House continued to process the telemarketers' credit-card sales even when it knew, or should have known, about their deceptive sales practices.

Under the proposed settlement, Electronic Clearing House would not admit violating any laws but would be prohibited from assisting any prize-promotion telemarketer and would be required to conduct monthly investigations of each telemarketer customer whose credit-card transactions exceed $30,000 a month.

Electronic Clearing House also agreed to terminate any telemarketer customers who are engaging in fraudulent, deceptive or unfair practices.

Four of the telemarketers in question--Pioneer Enterprises, Sierra Pacific Marketing, Legacy Unlimited and Fitness Express--are defendants in lawsuits filed by the FTC. The agency alleges that the companies used deceptive practices, such as misrepresenting the value of "awards" offered in prize promotions and other terms of the promotions.

The proposed settlement was filed earlier this month in a U.S. district court in Las Vegas, where Electronic Clearing House is incorporated. It requires court approval.

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