Discount Clubs Debited Bank Accounts of Payday Loan Applicants
February 15, 2011
Thanks to St. Louis BBB for this warning!

Some Internet discount clubs that promise to save members hundreds of dollars a month on purchases ranging from computers to pizza are under attack from consumers who say the clubs took money from their bank accounts after they applied for online loans.

The Better Business Bureau (BBB) suggests extreme caution when dealing with any online loan business that asks for bank account numbers. More than 600 consumers in 44 states have filed complaints against Liberty Discount Club of Scottsdale, Ariz., in the past 12 months.  Most complainants said they never intentionally enrolled in the club. Many said they never heard of the company until they noticed money missing from their bank accounts.

Another Scottsdale business, 777 Discount Club, also known as 777 Web Discount Club, is the focus of similar complaints from consumers.  The BBB says it has closed more than 270 complaints against that business in the past 12 months.

Both Liberty Discount Club and 777 Web Discount Club have “F” grades with the BBB, the lowest grade possible. Both have ties to Scottsdale businessman Moe Tassoudji.

The BBB in Phoenix reports that Liberty Discount Club failed to respond to more than 500 of the complaints.

Many Liberty Discount Club complainants said they went online either to search for loan information or to apply for loans.  They said they had no interest in enrolling in a discount club and did not know they were enrolled until they found money taken from their bank accounts. 

Several said they had dealt with a company called Last Chance Cash Advance of Manchester, Tenn.  The firm has an “F” grade with the BBB. Several consumers who contacted Last Chance Cash Advance said Liberty Discount Club or related businesses debited their bank accounts. Others said they were charged by an ID theft protection company, even though they did not intend to contract with that company.

Consumers accessed the Last Chance Cash Advance site through the website of Amnesty Financial of Indianapolis, Ind.  That company has a “D” grade with the BBB. Mail sent to Amnesty Financial was returned, marked “insufficient address.” A Phoenix BBB report said Amnesty Financial was using the BBB Accredited Business logo even though it  was not a BBB accredited business. The logo was still on the site last week.

A woman who identified herself to BBB St. Louis as Erin Sullivan, a supervisor at Liberty Discount Club, told the BBB that Liberty operates a “cross sales” business with online loan sites. She said consumers applying for loans must specifically opt out of membership or they are enrolled automatically. If they do not respond to a follow-up e-mail allowing them to withdraw, their accounts are charged, she said. She acknowledged a problem with the system and said, ”We’re planning to fix the website.”

The Liberty Discount Club website shows a woman holding an infant and a bag of groceries. “How this Mom saved $100s per Month,” the site says.  The club says it works with more than 150,000 brand-name stores and offers discounts for dining, shopping, entertainment and communication items.

A testimonial says, “We Saved $356 This Month” and shows a photo of a young African-American couple. They are identified as Sarah and Rob Jones of Burlington, N.C.

The same family photo, names and testimonials are also used for a variety of other online discount club sites, including Discount Club 247, Key Discount Club, Saving Club 247, Web Savings Club, Your Local Savings Club and Unlimited Local Savings. The same testimonial also is used for a discount club called Perks 2 U. In that case, however, Sarah and Rob Jones are pictured as a young Caucasian couple.

The BBB offers several suggestions for consumers searching for online loans:

  • Because these short-term loans almost always carry high interest rates, you might want to exhaust other alternatives before applying.
  • Never pay an advance fee in exchange for a promise of a loan. These are almost always scams and, once you have paid, you likely will never hear from the thieves again.
  • Be extremely cautious when giving out any personal information online, such as Social Security and bank account numbers, especially to companies you do not know. Be alert for websites that force you to give that information before even telling you whether you qualify for a loan.
  • Read all information on the site very carefully, searching for hidden fees or disclaimers. Often, a company’s “Terms and Conditions” can be several pages long and contain critical information for consumers.
  • Understand that many disreputable companies exaggerate or entirely fabricate testimonials.  Be suspicious of testimonials and ask for references you can call and speak with.
  • Contact the Better Business Bureau for Reliability Reports on businesses by going to www.bbb.org