Customers crying foul over credit

Jeffrey Libby

Friday, Jan. 11, 2002 | 4:26 a.m.

WEEKEND EDITION

Pioneer First, with offices in Henderson and Las Vegas, was like a laid-back vacation for telemarketers selling credit cards there last summer and fall.

The 70 salespeople had an office dartboard and a basketball hoop. They sat at comfortable desks with Internet access rather than facing the boiler room operations that many telemarketing companies run.

Some took home commissions of more than $1,000 a week. Managers threw pizza parties every Friday. Sometimes, as a prank, fog from a machine was blown through the office.

But from information assembled from employee sales logs and conversations with landlords and consumers, it appears the casual workplace of Pioneer First could have been a well-organized national operation that federal regulators refer to as "an advance-fee scam."

Sales records show that in the five months it operated in the Las Vegas Valley, Pioneer First may have grossed as much as $6.5 million by charging more than 34,000 customers nationwide an upfront fee of $189 for a "platinum" card with a promised $5,000 line of credit.

While the Federal Trade Commission says it is a violation of federal law to charge consumers an upfront fee to open a line of credit, state and federal regulatory agencies won't say if they are investigating Pioneer First despite dozens of consumer complaints against the company. There are no charges against the company.

Consumers contacted by the Sun say they never received what they paid for, and landlords say the company left owing thousands of dollars in unpaid rent when it moved to Salt Lake City. Employees found they were out of a job when they arrived at their local offices to find the doors padlocked.

A general sales manager, the only company official to return calls for comment, denied any wrongdoing. He blamed complaints on misunderstandings and "computer problems."

But the trail the company left behind locally has disturbed consumers, former employees and investigators.

The FTC has warned the public of "advance-fee scams" where companies "are preying on people, mostly those with bad credit or no credit, who can least afford it," FTC spokeswoman Brenda Mack said.

"Most of the time, they're advertising something they don't intend to follow through on," she said.

Pioneer First used late-night cable TV spots to advertise a $5,000 line of credit and zero percent financing for the first 12 months in exchange for the initial $189 fee, consumers and former salespeople say.

People who needed to clean up their credit or who wanted a secured card flocked to the company. When sales were at their highest, the company had three shifts working five days a week in four valley office suites.

Consumers say their bank accounts were immediately debited, but the card was never delivered. Or if it was delivered, it was for use only with a promised catalog that never arrived.

Wayne E. Wrath, a Pioneer First general sales manager, said the only thing the company is selling is a $5,000 line of credit to buy merchandise from an online company catalog. That catalog will arrive, he said.

The Sun obtained several company sales logs and contacted 25 people who paid for the cards. They said that when they called the toll-free number listed on the screen, salespeople told them they could repair damaged credit with the card, pay bills, shop -- just as with any other credit card.

"I've had some bad luck in my life, but I'm shocked the company was able to do that," said Isiaa Robinson of Detroit, who paid for his card in late October but has yet to receive it. "It was on TV, and it was national. I was just trying to do the right thing.

'Guaranteed'

"I talked to a young lady. She said it was guaranteed. It wasn't like someone pulled me over on the side of the street."

Sonia L. Felix of Tuscon, Ariz., said her 11-year-old daughter managed to purchase the card, thinking it would be a gift for her mother to help send the daughter to camp. Felix tried to return it, but couldn't.

Other consumers say they planned to pay utility bills, consolidate debt, arrange funeral services, pay off insurance premiums, go Christmas shopping.

"They told me I was guaranteed a $5,000 line of credit," said Reva Giddons, a University of Maryland hospital worker on maternity leave who ordered her card on Sept. 28 but never saw it. "To me it was a credit card. It wasn't a magazine card."

De Ette Vitton of Tucson wanted to clean up her credit through Pioneer First.

"They advertised that I could re-establish my credit (and said) they reported to three different credit bureaus," she said. "The way they advertised, they came off as a regular credit card.

"I'd like to see them fry."

Consumers said the ads touted a platinum card. Those who knew about the catalog say they learned about it after they received their card.

Former salespeople say they repeated in good faith what managers told them, stressing the $5,000 line of credit.

They say there was nothing in the original scripts about the card being used only for a catalog. A later script obtained by the Sun prompts telemarketers twice to tell customers they are applying "for the Pioneer First Platinum Card."

The script says the $5,000 limit is "good for products through Pioneer First" only after telemarketers have obtained a consumer's banking accounting number and other information. The disclosure comes as part of the boilerplate repetition of advertised annual fees, minimum monthly payments and interest rates.

Saleswoman Arlene Gretz said she would "repeat the script word for word all the way down, but I'd read it real fast."

Kathleen Delaney, Nevada deputy attorney general for the Bureau of Consumer Protection, said her department has made attempts through advertisements to alert the public to potential scams.

"But consumers still need to make educated choices," she said. "Generally these solicitations contain fine print, and if the consumers don't read that, they take a risk."

Quick sales

Mike Peters, a former Pioneer First telemarketer, said the company pushed for quick sales with little discussion.

"Once (a person) gave us their checking account number, the deal was done," he said. "We couldn't disclose our address, and we were told to say there was never a manager available."

Wrath responded to questions about the potentially misleading impression of the platinum card sales pitch by saying, "People hear what they want."

He blamed continuing delays opening the online catalog on the incompetence of computer programmers and had no explanation of why the print catalogs originally promised by the company were abandoned.

Consumers who have waited more than four months -- despite being promised a catalog within four to six weeks -- will eventually have access to a catalog, he said.

Patricia Jarman-Manning of Nevada Consumer Affairs said her department and the privately run Better Business Bureau have received 72 complaints against Pioneer First since August.

The complaints cover nearly every aspect of its business, including credit, billing, advertising, warranties, delivery and refund practices.

Before abruptly closing in mid-November, Pioneer First addressed one of the complaints, according to the agencies. The bureau's Las Vegas office eventually assigned the company an "unsatisfactory" rating.

A company would only receive that rating if it "received so many complaints that it established a very distinct pattern of consumer dissatisfaction," said Sylvia Campbell, local Better Business Bureau president.

In some respects, that rating is moot. A company sales manager said Pioneer First has reopened in Salt Lake City. That removes the company from the state's jurisdiction, Jarman-Manning said.

But when any company moves out of state while under investigation, Jarman-Manning said the Consumer Affairs Division can pursue joint investigations with other states and federal law enforcement agencies.

The Better Business Bureau, for its part, says it will inform its other 100 bureaus about Pioneer First's rating.

"Generally speaking, if a company has a poor track record and they're a company that bilks consumers, then after they shut down in one place, they pop up somewhere else," Campbell said.

Workers showed up Nov. 19 to find their 9,000-square-foot Henderson office at 120 Corporate Park Drive emptied and padlocked. The South Sandhill Road offices in Las Vegas and a Las Vegas residence also had been abandoned. Pioneer First's abrupt departure from Nevada was necessary, Wrath said, because computer problems during its last month had caused many sales to be deleted and caused heavy losses.

He blamed computer problems for delayed delivery of cards, but said another "big batch" would be sent Dec. 26. In a few weeks, complaints would be a "nonissue" because everyone would have received their cards by then.

But after Dec. 26, Wrath didn't return calls for comment.

Pioneer First's paper catalog apparently never became a reality. No one contacted by the Sun ever received one.

Consumers tell stories of waiting 20 minutes or more before getting through to customer service only to be told that cards and catalogs were delayed, but would be arriving soon. Calling a week later, they would get a similar story. No one interviewed has managed to purchase anything from Pioneer First other than the $189 card.

The company registered in April in Henderson and Clark County as a corporation under the name West Cal Equipment Inc., renting three office suites at a strip mall at 4795 S. Sandhill Road in unincorporated Clark County.

Robert Barr, listed as West Cal Equipment president, did not return requests for comment made through his sales manager over several weeks.

Attempts to track down Barr through 30 other businesses he incorporated in Nevada during his five months running Pioneer First were also unsuccessful.

None of Barr's businesses -- even those with names such as C & F Trucking, the Aircraft Doctor and Tahoe Graphics -- had listed public phone numbers where potential customers could call. Two other businesses run by Barr that were publicly listed in the telephone book had disconnected lines when called in early December.

Another of Barr's Sandhill Road businesses, Carrington-Carmichael Group, had 35 complaints lodged against it with the Better Business Bureau and Nevada Consumer Affairs.

On Nov. 28, about 10 days after Pioneer First left town, constables, acting on an order from Las Vegas Justice Court, sealed the three Las Vegas suites with red tape -- the company had left owing a landlord thousands of dollars in rent. All that was left was a wooden table in the front office.

Thousands owed

The owner of the Henderson office said he also is owed several thousand dollars in rent. Employees were left out of a job and a week's wages. They say the state Labor Commission made a partial repayment of the lost wages.

"I want to see these guys hung out to dry," said former employee Michael Petersen, who was left unemployed and originally owed about $1,000.

Yvonne Rodgerson, a military wife and mother of two children, went to work for Pioneer First as a telemarketer in mid-August. Working for the first time in telephone sales, she says she believed the script.

She told callers that Pioneer First reported to three credit bureaus and that on-time payments would help improve their credit rating. She also gave customers advice on paying off mortgages and even prayed with them at times. But by October, when many of her calls were from customers complaining about useless cards or wondering when cards would be delivered, her suspicions grew. Finally she told a couple of customers to cancel their orders.

"I genuinely thought I was helping people," Rodgerson said.

When told that Pioneer First appears to have opened new offices in Salt Lake City where new hires are selling the same platinum cards, Rodgerson said, "Please tell my customers that Yvonne didn't know. They trusted me."

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