On July 14, the Federal Trade Commission (FTC) secured a court order aimed at halting allegedly deceptive practices against seven companies and three individuals operating the “Accelerated Debt” program. The defendants allegedly contacted consumers through telemarketing calls or in response to calls resulting from their mail and online ads and made false claims about their ability to substantially reduce consumer debts and misleading consumers about fees. The FTC alleged these actions violated the FTC Act, the Telemarketing Sales Rule, the Impersonation Rule, the Fair Credit Reporting Act (FCRA), and § 521 of the Gramm-Leach-Bliley Act by making false statements to get consumers’ financial account numbers. The court’s order includes a temporary restraining order, asset freeze, and the appointment of a temporary receiver to oversee the defendants’ business operations.
The complaint highlighted that the defendants specifically targeted mostly older consumers, including some veterans, with their deceptive practices. For example, an Army veteran was $13,000 deeper in debt and saw his credit score plummet from the high 700s to the 500s because of the defendants’ alleged scheme. He stated that he almost lost the security clearance required for his job after the defendants told him to stop paying his credit cards, which then went into default.
Key Findings
The court’s findings indicate a strong likelihood that the defendants engaged in deceptive practices, including:
- Misrepresentation of Services: The defendants allegedly made false claims about their ability to substantially reduce consumer debts and misrepresented fees as part of the debt to be eliminated.
- False Affiliations: Claims were made that the defendants were affiliated with banks, credit card issuers, and government agencies, including the Social Security Administration and the Consumer Financial Protection Bureau.
- Advance Fees: The defendants reportedly charged illegal advance fees for debt relief services that were not fully performed.
- Telemarketing Violations: The defendants initiated calls to numbers on the National Do Not Call Registry and failed to transmit caller identification information.
- Unauthorized Use of Consumer Reports: Consumer reports were allegedly used without proper authorization, violating the FCRA.
Financial Implications
The FTC presented evidence suggesting that the defendants generated at least $104 million in gross revenues through these unlawful practices. The court has determined that immediate and irreparable harm will result unless the defendants are restrained from continuing these activities.
Court Orders
The court has issued several orders, including:
- Asset Freeze: To prevent the dissipation of assets, the court has frozen the defendants’ assets, prohibiting any transfer or disposal.
- Appointment of a Receiver: A temporary receiver has been appointed to manage the defendants’ business operations and assets, ensuring compliance with the court’s orders.
- Expedited Discovery: The FTC and the receiver are authorized to conduct expedited discovery to uncover the full extent of the defendants’ business practices and assets.