Federal Trade Commission Shuts Down Debt Relief Services Operation

The Federal Trade Commission (“FTC”) has reached a settlement with four of the defendants in an allegedly deceitful debt relief services operation that claimed that for $995.00 it would dramatically reduce consumers’ credit card interest rates.  The business operation was based in Canada and New York.

Pursuant to the settlement, the defendants are precluded from delivering pre-recorded voice messages (also known as “voice broadcasting” or “robocalling”) to consumers and from selling debt relief services.

According to the complaint, the defendants utilized unlawful robocalls and falsely promised refunds to consumers if they did not save at least $2,500.00 as a result of lowered credit card interest rates.  Apparently, the defendants telephoned credit card issuers and attempted to conduct three-way calls amongst the credit card company, the consumer, and one of the defendants’ so-called financial representatives. Instead of a reduction in interest rates, consumers, who were already suffering from financial difficulties found themselves burdened with an additional $995.00 credit card charge.

Reports issues by the FTC indicate that the business operation generated approximately $13 million in revenue from more than 13,000 consumers.

In addition to banning the defendants from delivering prerecorded messages and selling debt relief services, the proposed settlement order permanently prohibits the companies and their owners from: (1) making misrepresentations about any goods or services, including anyone’s ability to obtain a loan modification or improve a consumer’s credit rating; (2) misrepresenting the terms of any refund or cancellation policy, affiliation with any government or non-profit program, or that a consumer will receive legal representation; (3) violating the FTC’s Telemarketing Sales Rule; (4) illegally calling numbers on the National Do Not Call Registry, or abandoning calls without involving a live operator; and (5) failing to transmit caller identification, and failing to disclose the seller’s identity and the call’s purpose.

Additionally, the settlement prohibits the defendants from selling or otherwise benefiting from customers’ personal information, from failing to properly dispose of customers’ personal information within 30 days, and from failing to monitor sales personnel for compliance with the order.

The order also imposes a judgment of more than $13.1 million, which will be suspended upon payment of $159,000.00 by the settling defendants.  Additional funds are expected from the court-appointed receiver’s sale of the defendants’ assets in the U.S. and the full judgment will become due immediately if the defendants are found to have materially misrepresented their financial condition or fail to comply with the terms of the order.