FTC Refunds United Debt Counselors Victims
Today the FTC refunded over $480,000 to United Debt Counselors, LLC costumers misled into paying upfront fees.
In March 2017 the FTC reached a settlement with United Debt Counselors and imposed a $9 Million judgement representing the amount illegally charged in advance. The FTC complaint filed that February alleged that consumers were misled with exaggerated claims of how much money they would save and that United Debt Counselors charged them advanced fees before any negotiation was done on credit card debt. The defendants marketed a high success claim and promised credit card debt cut in half and that customers would be debt-free within 36 months. The company also claimed consumers would have a special savings account that only consumers could control, but the FTC found that the company removed the monthly fees from the accounts. Under a stipulated court order the FTC banned United Credit Counselors from making such misrepresentations about debt relief and unsustainable claims about financial products and services.
FTC finds United Debt Counselors in violation of Telemarketing Sales Rule
The FTC claims the company stated a high client retention rate in their program, but less than half completed the program, and even less than that became debt free within the 36 month mark. According to the FTC complaint, consumers were scammed through email marketing campaigns that reached up to 100,000 consumers per week, through website advertising, and through the phone when calls were place to inquire about their dent relief services. The complaint states that instead of the promised experienced sales rep, the company would instead send a notaries public who knew little about debt relief services and just played a sales video and witnessed the contract signing, which charged advanced fees upfront. This violates the FTC’s Telemarketing Sales Rule (TSR) which states that advanced fees can’t be charged unless costumers first meet face-to-face with a knowledgeable sales representative who can answer all their questions and fully describe the program.
Today, a year since filing the complaint against United Debt Counselors,
the FTC has mailed out 5,745 checks refunding the consumers that lost money in the scam. The average refund amount is $84.27 totaling to nearly half a million dollars.
The original press release in March stated, “The FTC has previously instructed debt relief companies that representations about debt relief services are deceptive unless all consumers are included in the calculations, and it has warned businesses not to engage in sham face-to-face presentations.” The warning continues, “They can charge advance fees only if they comply with the TSR; sales persons making face-to-face sales presentations must have authority to discuss material terms, they must do so in specific detail, and they must be able to answer consumers’ questions.”
The FTC files complaints when it has “reason to Believe” the law has been violated and that it’s in the public interest. Business looking to comply should visit the FTC’s guide for Debt Relief Services and employ the services of an attorney or law firm. For further information for compliance please visit the FTC’s TSR webpage found here.
The original Press FTC release can be found here along with the Stipulated Order and complaints filed with the court in March 2017.
Federal Trade Commission, Plaintiff, v. United Debt Counselors, LLC, a limited liability company, formerly known as United Debt Services, LLC, also doing business as Department of Negotiations; David Melrose, individually and as a member of United Debt Counselors, LLC; Kirk Lanahan, individually and as an officer of United Debt Counselors, LLC; Corinne Maples, individually and as an officer of United Debt Counselors, LLC, Defendants