Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: Debt relief operation settles FTC misrepresentation and unauthorized billing charges, (Sep 11, 2013)

By Tobias J. Gillett, J.D., LL.M.

A credit card interest rate reduction telemarketing operation and its three principals have settled FTC charges that they falsely claimed that they would substantially reduce consumers’ credit card interest rates and debts, the FTC has announced (FTC v. Innovative Wealth Builders, Inc., FTC File No. 122 3127, Case No. 8:13-cv-00123-VMC-EAJ).

According to the FTC’s complaint, telemarketers working for Innovative Wealth Builders, Inc. (IWB) would call consumers and offer to reduce their credit card interest rates and help them get out of debt faster. IWB would claim that it had been in business for many years and could negotiate far lower interest rates with lending institutions than consumers could achieve for themselves. IWB would guarantee that consumers would receive savings that typically ranged from $1,500 to $5,000. IWB would then inform consumers that they would be charged a one-time fee of $500 to $2,000 that would be recouped through the promised savings. The consumers would purportedly be at “no risk” because IWB would offer a complete refund if the savings were not realized within a short time, usually 30 days.

In exchange for their fee, consumers would receive a “welcome packet” containing forms that requested their personal and credit card information. Once the forms were submitted, consumers would receive a “financial plan” that allegedly consisted of “nothing more than a comparison between (i) the total amount consumers would pay on their debts if they only paid the minimum monthly amount and (ii) the total amount consumers would pay on their debts if they paid some amount greater than their monthly minimum payment.” IWB would allegedly also place additional charges on consumers’ credit cards without their consent, and “in numerous cases” would refuse to make a refund when requested.

The complaint charged IWB with violations of the FTC Act for misrepresenting material facts, refund misrepresentations, and unauthorized billing, and with violating the FTC’s Telemarketing Sales Rule by making misrepresentations, including debt relief and refund misrepresentations; by charging a fee in advance of providing debt relief services; and by unauthorized billing.

Under the stipulated order, IWB and its principals—Carly Janene Pelland (also known as Carly Zurita), Sheryl Leigh Lopez, and Tamara Dawn Johnson—will be permanently banned from engaging in telemarketing and from marketing any debt relief products and services. They also will be barred from making any material misrepresentations in connection with any advertising, marketing, promotion, offering for sale, or sale of any financial-related products or services, or from making any of a range of misrepresentations with respect to the advertising, marketing, promotion, offering for sale, or sale of any product or service. They will also be prohibited from making benefit, performance, or efficacy claims without competent and reliable substantiating evidence.

In addition, the order imposes a $9,939,388.49 judgment on the defendants, jointly and severally. They must also provide the FTC with sufficient consumer information for it to administer redress, must not disclose, use, or benefit from any customer information, and must dispose of such information within 30 days of written notice from the FTC to do so. The order also provides for compliance reporting, monitoring, and recordkeeping.

Companies: Innovative Wealth Builders, Inc.

News: ConsumerProtection FederalTradeCommissionNews