Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: Loan Modification Marketers Settle FTC Charges, (Jan 30, 2013)

Companies offering vehicle loan modification services and their principals have settled FTC charges that they took hundreds of thousands of dollars from consumers through false offers to modify their automobile loans, the FTC has announced (Federal Trade Commission v. NAFSO VLM, Inc., FTC File No. 122 3019, Case No. 2:12-cv-00781-KJM-EFB). The companies are Kore Services LLC, doing business as Auto Debt Consulting and NAFSO VLM, Inc., doing business as Vehicle Loan Mod.

The FTC’s complaint had alleged that the companies offered vehicle loan modification services through telemarketing and the Internet, promising consumers that they could reduce the consumers’ monthly automobile loan payments by 25 to 40 percent, in exchange for fees ranging from $350 to $799.

The companies would allegedly inform consumers that they should cease making payments on their loans, but would fail to do anything to obtain a loan modification for them once the companies had collected their fees. Despite a “100 percent money back guarantee,” the companies would refuse to extend refunds to dissatisfied consumers, and some consumers’ vehicles were repossessed.

The FTC’s complaint, filed in the federal district court in Sacramento, California, charged that the companies’ practices violated the Federal Trade Commission Act, and sought temporary, preliminary, and permanent injunctive relief; rescission or reformation of contracts; restitution; the refund of monies paid; the disgorgement of ill-gotten monies; and other relief.

The stipulated settlement order prohibits the companies and their principals from offering, or assisting others to offer, any vehicle loan assistance relief products or services; bars them from making specific misrepresentations regarding any financial-related products or services they may market; prohibits them from making misrepresentations regarding any other products they may offer; requires them to support their claims with competent and reliable evidence; and orders them to destroy customer information obtained through their operation.

The order also imposes a $279,728 monetary judgment, with the order suspended as to the individual defendants due to their inability to pay. The companies must turn over all assets to the FTC, and if the financial information the individual defendants provided is later determined to be false, the full amount of the order will immediately become due.

Companies: Kore Services LLC; NAFSO VLM, Inc.

News: ConsumerProtection FederalTradeCommissionNews