The Federal Trade Commission (FTC) has had to invest loads of money again to police the debt relief industry to go after more false promises and schemes to sell people worthless services.
Every time something like this happens and the debt relief industry doesn't police itself, it only hurts all the good companies out there who want to play by the rules, deliver the promised services, and charge a fair fee for the service they deliver. In the end, bad actors in the debt relief space limit the opportunity and income for those that care about doing the right thing.
And why does this happen time and again, it's because, as the complaint says, "Enticing consumers to pay significant sums of money through false promises of debt relief can be a lucrative business. Indeed. since January 2013 Defendants have taken millions of dollars from consumers through their Debt Relief Scam." - Source
The FTC said a federal court has halted, and frozen the assets of, a nationwide debt relief telemarketing scam that bilked millions of dollars from consumers, pending resolution of allegations made by the Federal Trade Commission and the State of Florida.
The scammers, who used a variety of phony business names with associated websites, cold-called consumers with credit card debt and falsely promised that, for an up-front fee of, on average, between $695 and $1,495, they would save them thousands of dollars by reducing their credit card interest rate. The defendants also allegedly falsely promised to refund consumers' money if they failed.
According to the complaint, the telemarketers identified themselves as "card services," "credit services," and "card member services," or one of the defendants' phony businesses. To win consumers' trust, they said they knew the amount of their credit card debt, provided the caller's license or badge number, mentioned the Internet domain name of the phony business, and falsely claimed they had a business relationship with consumers' lenders. During the call, the defendants billed consumers' credit cards between $500 and $1500 and promised a specific reduced interest rate and savings amount, such as 6 percent or lower and $5,000 within 90 days.
The consumers did not receive the promised results or refunds, and instead became more indebted, the FTC and State of Florida alleged.
In fact, the FTC says, "In some instances, after consumers pay the hefty up-front fee, the consumers never hear from Defendants again and the consumers' attempts at further communication are ignored."
The FTC and State of Florida's complaint named Steven D. Short and his wife, Karissa L. Dyar, as defendants, and their companies, E.M. Systems & Services LLC, Administrative Management & Design LLC, Empirical Data Group Technologies LLC, Epiphany Management Systems LLC, and KLS Industries LLC, doing business as Satisfied Services Solutions LLC. It also names Christopher C. Miles and his telemarketing company, One Easy Solution LLC.
But the FTC says this enterprise also delivered services under a number of fictitious names, including: Bigger Budget, Competitive Budgeting, Conserved Budgeting, Consigned Savings, Decisive Budgeting, Efficient Budgeting, Insightful Budgeting, Intuitive Budgeting, Less Costly Living, Living Competitively, Lowered Expenses, Prepared Budgeting, Reduced Expenses, Resourceful Budgeting, Sensible Budgeting, Skilled Budgeting, Spend Less Monthly, Total Budgeting, Today's Financial Living, Your Household Budget, and Your Next Financial Step.
The defendants allegedly violated the FTC Act, the FTC's Telemarketing Sales Rule, and the Florida Deceptive and Unfair Trade Practices Act. The complaint noted that Short and Dyar participated in a similar scam, Pro Credit Group, that was shut down by the court in an FTC law enforcement action.
Even companies that promise money back guarantees, as this collective enterprise allegedly promised in the sales pitch, sometimes fail to provide not only the service, but the promised refund as well. "Although Defendants promise consumers that they can obtain a full refund if they do not save thousands of dollars within a certain number of days. Defendants frequently do not honor this money-back guarantee. Not only do Defendants frequently refuse to give refunds, they also sometimes threaten consumers or subject them to abusive language when they attempt to obtain refunds from Defendants."
I'd like to say that's uncommon, but among the scammers in the debt relief industry, it's all too common. It seems that no matter how often I preach to readers to check out the company they are planning to work with, they don't. I even publish a free guide on how to do that. See The Ultimate Consumer Guide to Checking Out a Debt Relief Company Before You Sign On the Line.
If consumers had actually performed just part of that self-investigation process, in less than five minutes of investigation by a consumer before signing up for the service it would have raised enough red flags to see something was not right with the sales pitch.
When good debt relief companies play by the rules and pay loads of money to get licensed and obey the regulations and scammers don't. All that happens is the scammers of the industry get an unfair free pass to screw consumers out of a lot of hard earned money and the good guys are left with more regulations.
So in the end, not only do consumers get ripped off but legitimate debt relief companies do as well. Yet the debt relief industry does little to nothing to root out these bad actors before harm occurs.
In order to help, I actually accept and publish consumer complaints and urge the companies named to respond to the consumer and provide exceptional customer service to repair the issue. This way, consumers can have their problem addressed and good companies can demonstrate exceptional customer service to show others that they do care about their customers and can be trusted. People can file debt relief complaints online here.
If you have a credit or debt question you'd like to ask, just click here and ask away.
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This article by Steve Rhode first appeared on Get Out of Debt Guy and was distributed by the Personal Finance Syndication Network.