Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: Tax Relief Service Agrees to Refrain from Telemarketing, Selling Debt Relief Services to Settle FTC Charges , (Feb 5, 2013)

By Jeffrey May, J.D.

In the FTC's first action against a tax relief company, American Tax Relief LLC, its officers, and related individuals have agreed to settle charges that they violated Sec. 5 of the FTC Act by misrepresenting their ability to secure relief for consumers on their tax debts. The federal district court in Chicago entered a final order for permanent injunction and other equitable relief against the company, a husband and wife who were owners/directors of the company, and relief defendants, the FTC announced on February 5 (FTC v. American Tax Relief LLC, FTC File No. 1023083, Case No. 1:10-cv-06123).

In October 2010, the FTC filed its complaint against the California limited liability company, which has its principal place of business in Beverly Hills. The FTC alleged that the company falsely claimed that it could settle consumers’ delinquent federal and state taxes for a fraction of the amount that they owed and that it could remove tax liens and stop wage garnishments, bank and tax levies, and property seizures. The conduct had been ongoing since October 1999, according to the agency.

The settlement follows an August 8, 2012, order of the district court, granting partial summary judgment in favor of the FTC. The court had found that the company violated the FTC Act by misrepresenting that it had significantly reduced the tax debts of thousands of people and that consumers qualified for tax relief that would significantly reduce their tax debts. The court also found the husband/owner—the scheme's purported leader—and the individual relief defendants liable. In addition, the wife was found to have had the authority to control the company and was likely at least recklessly indifferent to its deceptive practices, if she did not have actual knowledge of the practices.

Under the consent decree, American Tax Relief LLC and its leader agreed to refrain from telemarketing and from selling debt relief services. The wife also was permanently prohibited from selling debt relief services. In addition, multi-million dollar judgments were imposed, but the judgments were to be suspended once the defendants and relief defendants surrendered various assets that totaled more than $15 million, including cash, a Beverly Hills home, and a 2005 Ferrari, according to the FTC.

News: ConsumerProtection FederalTradeCommissionNews