State sues Eureka Springs business owners

Monday, November 24, 2003

A company apparently based in Eureka Springs has been sued by state Attorney General Mike Beebe, for alleged deceptive business practices involving Internet credit card fraud, and other counts.

In an interview Thursday morning, Beebe's Press Secretary Matt DeCample told Carroll County Newspapers that a lawsuit had been filed "about an hour ago," naming Owen Barnett and Dorothy A. Barnett of Eureka Springs as defendants. The suit, filed in Pulaski County, also names the Barnetts' purported businesses, First United Group and Credit USA.

There is no listing in local phone books for either the Barnetts or First United Group, but there is a Credit USA listing.

However, Owen and Dorothy Barnett are reportedly owners of Cafe Laredo on Spring Street, at the half level between Spring and Main. There was no answer Thursday at 11:30 a.m. at the Cafe Laredo phone number, and a source in Eureka Springs said he had heard the cafe had closed recently.

The attorney general's office said corporate filings show the Barnetts as owners of businesses or residences at 26 Ridgeway and 4052-D East Van Buren in Eureka Springs. They may also have owned or have connections to the Kauffee House Aroma at 12 Spring St. ---- which is the address of the Basin Park Hotel, but they had reportedly moved the coffee house equipent into the Cafe Laredo location. They joined the Chamber of Commerce in February of 2002. They are current with their CAPC taxes.

Using an Internet search technique on the phone number, it comes back to Credit USA, with links to the Eureka Springs Chamber of Commerce. A search of the chamber Web site was not successful in finding the Barnetts listed on the site, and a spokesman at the chamber said he had never heard of the Barnetts or Credit USA.

It is not difficult for an outsider to link to a legitimate Web site, without the Web site's knowledge, as is apparently the case in the chamber's site.

The Credit USA phone number was busy for an hour, and when a reporter finally got through, a recorded message said the business is extremely busy and suggested leaving a phone message. A message was left by this newspaper.

DeCample said, "The named defendants are Owen Barnett and Dorothy A. Barnett. The companies listed are First United Group, Inc., Barnett and Company, Inc., and Credit USA, Inc. They likely have not been served (with the lawsuit), as the suit was filed an hour ago in the 7th division of Pulaski County Circuit Court."

DeCample said, as many as "10,000 victims across the United States have been victimized" by the companies. He said a dozen or more Arkansans had complained.

Attorney General Beebe filed suit against First United Group, Inc. for allegedly swindling thousands of people out of money with "empty promises" of credit cards or loans.

Beebe said that "based in Eureka Springs, First United solicited business through spam e-mail and Internet search engines. Both led potential customers to Web sites promising unsecured credit cards and personal loans. After being offered money-back or double-money-back guarantees, customers typically paid an advance fee ranging from $39.95 to $44.95 for MasterCard or Visa credit cards. First United did not issue any credit cards, nor were they authorized to do so.

"Instead, they sent customers information about obtaining credit, information that is readily available for free through numerous outlets.

"The people running this company made promises and guarantees they knew they would never fulfill," Beebe said. "They blanketed the Internet with spam hoping to lure consumers who are trying to establish or regain a good credit record. Not only did the victims lose money, but in some cases, they also received threats if they did not pay off the scam artists."

DeCample said the companies could have made a half million dollars or more on the "scam."

First United customers who did not pay immediately were often sent threatening e-mails by a "CMA, Inc. Collections." The collection agency appears to be a fictitious company operated by First United. Customers who complained to First United about not receiving the credit cards promised them rarely received refunds.

Beebe is suing First United for violations of the Arkansas Advance Fee Loan Brokerage Act, and the Arkansas Deceptive Trade Practices Act. The lawsuit seeks to shut down First United's operations and secure refunds for customers.

Beebe reminds consumers of some simple guidelines to avoid these types of credit scams:

  • Legitimate credit-card offers will include a check of your credit history;

  • Although legitimate credit-card companies sometimes charge annual fees; they do not charge "up-front" fees or ask for any fees before you receive your card;

  • There is no fast fix for bad credit, so beware of companies offering quick repairs to credit.

    For questions about how to file a consumer complaint, contact the Attorney General's Office at 200 Catlett-Prien Tower Building, 323 Center Street, Little Rock, AR 72201. The office can be reached by calling (501) 682-2341 or 1-(800) 482-8982 or by visiting our website at TDD service is available for the hearing-impaired 682-6073.

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