December 6, 2022

Volume XII, Number 340

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December 06, 2022

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December 05, 2022

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FTC Bans Operators of Alleged Debt Relief Scam, $5.3M penalty

On February 28, the FTC announced that the operators of an alleged credit card interest rate reduction scam will be permanently banned from the debt relief industry as part of court orders resolving charges by the FTC and the Florida AG.  The FTC and Florida AG alleged that the operators engaged in deceptive and abusive practices violating the FTC Act, the Telemarketing Sales Rule, and the Florida Deceptive and Unfair Trade Practices Act in selling credit card interest rate reduction services to consumers.  According to the joint complaint, the operators made telephone calls claiming to permanently and substantially reduce consumers’ credit card interest rates, posed as the consumers’ credit card company representatives or affiliates and allegedly claimed they could save consumers thousands of dollars in credit card interest and enable them to pay off their debt faster.  According to the FTC, the operators left people even deeper in debt after they paid upfront fees of between $995 and $4995, as well as substantial fees to transfer their existing debts to new cards.

Under the terms of the settlements, the operators are permanently banned from advertising or selling debt relief products and services.  They also are prohibited from misrepresenting material facts in connection with any product or service. The order also prohibits deceptive and abusive telemarketing acts and practices, unsubstantiated claims, and prohibited payment practices.  The orders impose monetary judgments of $5.3 million, which will be partially suspended once two individual defendants agree to pay $225,000 and  $200,000, respectively.

Putting in Into Practice:  This recent action is important for two reasons:  (i) it demonstrates the FTC’s aggressive approach in putting companies out of business where it sees clear UDAAPs, among other violations of laws; and (ii) the FTC and state AGs will continue their collaborations in order to protect consumers by enforcing state and federal consumer protection laws.

Copyright © 2022, Sheppard Mullin Richter & Hampton LLP.National Law Review, Volume XII, Number 66
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About this Author

Moorari Shah Bankruptcy Lawyer Sheppard Mullin Law Firm
Partner

Moorari Shah is a partner in the Finance and Bankruptcy Practice Group in the firm's Los Angeles and San Francisco offices. 

Areas of Practice

Moorari combines deep in-house and law firm experience to deliver practical, business-minded legal advice. He represents banks, fintechs, mortgage companies, auto lenders, and other nonbank institutions in transactional, licensing, regulatory compliance, and government enforcement matters covering mergers and acquisitions, consumer and commercial lending, equipment finance and leasing, and supervisory examinations,...

213-617-4171
A.J. S. Dhaliwal Bankruptcy Attorney Sheppard Mullin Washington DC
Associate

A.J. is an associate in the Finance and Bankruptcy Practice Group in the firm's Washington, D.C. office. 

A.J. has over a decade of experience helping banks, non-bank financial institutions, and other companies providing financial products and services in a wide range of matters including government enforcement actions, civil litigation, regulatory examinations, and internal investigations.

With a diversified regulatory, compliance, and enforcement background, A.J. counsels financial institutions in matters involving...

202-747-2323
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