A company that advertised its ability to reduce debt loads of its clients, and according to the FTC even went so far as to claim non-profit status, has been shut down and been hit with a $28.2M judgment, and one of its principals has had to turn over real estate holdings.
The company operated as 800 Credit Card Debt and Debt.com. FTC said the company “…deceptively claimed they would eliminate or reduce consumers’ debts quickly and put an end to calls from debt collectors.”
The company’s advertising included statements like, “We’re 800 Credit Card Debt, America’s leader in helping settle debt . . . [W]e have programs available to help you eliminate your debt by up to 60.” They were often tagged with phony testimonials from supposed happy customers.
FTC said the company also created the impression it was a non-profit service, saying, “The following is a public announcement . . . Americans who are behind on their credit card payments must take action immediately. If YOU have ten thousand dollars or more in credit card debt, a new relief program is now available. . .”
According to FTC allegations, “they merely sold the sales leads generated by their ads to debt settlement providers, or to other lead generators or lead brokers that re-sold them. The complaint alleges that the defendants had no information about whether the companies that bought the leads could fulfill the promises the defendants made in their ads. In fact, the FTC charged that because many of their leads were sold to other lead generators and lead brokers, the defendants typically did not even know the identity of the debt settlement providers that ultimately purchased the leads.”
The $28.2M judgment will be suspended after all bank accounts, as well as cash from the sale of real estate owned by a principal, is surrendered.”
RBR-TVBR observation: Debt relief scams have been a hot category for the FTC of late. We know from personal experience that there are reputable counselors out there who can actually help consumers dig out from heavy debt.
There is nothing easy about it, however, and the rule of thumb when confronted with an advertising message – if it sounds too good to be true, it probably is in fact not true – applies.
Scammers reflect poorly on the entire business, and it can only help reputable companies in the long run if the FTC can successfully clear the field of scammers.