Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: FTC charges companies with bilking consumers out of thousands of dollars for bogus debt relief services, (Jun 3, 2014)

By Greg Hammond, J.D.

The FTC has charged DebtPro 123 LLC, five other companies, and four individuals with marketing “bogus debt relief services” to consumers, the agency announced today. Specifically, it was alleged that the California-based scheme billed consumers up to $10,000 after deceptively claiming it would settle consumers’ debts, provide legal advice, and repair consumers’ credit in three years or less (FTC v DebtPro 123 LLC, FTC File No. 1323112, Case No. SACV 14-00693 JLS (ANx)).

“These defendants said they would get consumers out of debt, but instead they bilked them out of thousands of dollars, often leaving them worse off than they were before,” stated FTC bureau of Consumer Protection Director Jessica Rich.

According to the complaint, the companies falsely and deceptively advertised and marketed that: consumers’ debts would be resolved by program completion; the companies would resolve the “typical consumer’s debt’ for 30 to 70 percent of the total amount owed; the companies had attorneys that would provide legal services to clients; the program would improve the typical consumer’s credit record, credit history, credit rating, and would remove clients’ negative items; the companies resolved specific accounts; and the companies would provide refunds to unsatisfied customers. However, in actuality, consumers’ financial situations worsened after they were told to stop paying and communicating with their creditors, to the extent that they lost their homes, had wages garnished, lost retirement savings accounts, and had to file bankruptcy. The FTC alleged that the companies took more than $8 million from consumers.

Consequently, the complaint alleged that the companies violated the FTC Act, the Telemarketing Sales Rule, and the Credit Repair Organizations Act by making false promises, providing marketing companies with deceptive materials intended to deceive consumers, and taking advance fees for their alleged debt relief services. The Commission is seeking permanent injunction to prevent future violations and relief to redress consumers’ injuries, including refunds, rescission of contracts, and disgorgement of ill-gotten monies.

Companies: DebtPro 123 LLC; Allstar Processing Corp.; Allstar Debt Relief LLC; Redwave Management Group, Inc.; BET Companies, Inc.

News: Advertising ConsumerProtection FederalTradeCommissionNews