An ex parte temporary restraining order has been issued against the participants in a debt relief services scheme that allegedly targeted seniors, including veterans, using a variety of deceptive practices, including falsely impersonating consumers' banks and credit card companies.
Susan M Brnovich of the U.S. District Court for the District of Arizona issued the restraining order at the request of the Federal Trade Commission ("FTC").
Earlier this month, the FTC filed a complaint against seven companies and three individuals who operated the "Accelerated Debt" program, alleging violations of the Section 5(a) of the FTC Act ("UDAP"), the FTC's Telemarketing Sales Rule ("TSR"), the FTC's Trade Regulation Rule on Impersonation of Government and Business ("Impersonation Rule"), the Fair Credit Reporting Act ("FCRA") and the Gramm-Leach-Bliley Act (GLBA). The FTC alleged that the companies and individuals falsely claimed to reduce consumers' debt by up to 75% or 85%. The complaint seeks monetary relief for consumers the defendants allegedly defrauded.
The FTC said the Accelerated Debt defendants, operated as a common enterprise relief scam and took in an estimated $100 million.
The FTC cited two examples of cases in which people were allegedly defrauded.
In papers filed with the complaint, the FTC contends that an Army veteran ended up $13,000 deeper in debt and had his credit score drop from the high 700s to the 500s because of the defendant's actions. The FTC alleged that he almost lost the security clearance he needed for his job after the defendants told him to stop paying his credit cards, which then went into default.
The FTC said that another consumer, a retired disabled veteran was forced to use his savings and retirement funds to repay the increased debt he incurred as a result of the defendants' actions and their illegal advance fee of almost $10,000.
The FTC said the defendants contacted consumers through telemarketing calls or responded to inbound calls that resulted from direct mail and online ads.
The defendants allegedly:
- Posed as credit card issuers, government agencies and consumer reporting agencies, to tell consumers that their credits cards were compromised and needed to be closed, in violation of the Impersonation Rule.
- Unlawfully obtained credit reports and used credit reports without a permissible purpose in violation of FCRA and UDAP.
- Made false promises that they could reduce consumers' unsecured debts in violation of UDAP.
- Misrepresented services in violation of the TSR.
- Charged illegal advance fees to consumers in violation of the TSR.
- Created remotely created checks in violation of the TSR.
- Made telemarketing calls to consumers on the National Do Not Call Registry and failed to transmit caller IDs in violation of the TSR.
- Failed to make clear and conscious disclosures required under the TSR.
- Made false statements to obtain consumers' financial account numbers in violation of GLBA.
- Failed to provide the debt relief services that were promised.
In granting the restraining order, the court determined that there was good cause to believe that the defendants engaged in violations of UDAP, TSR, Impersonation Rule, FCRA, and GLBA. The court also froze the assets of defendants and appointed a temporary receiver. The order further prohibits the defendants from engaging in certain prohibited conduct, including misrepresenting their services, charging fees before performing their debt relief services, failing to disclose that stopping timely payments will adversely impact creditworthiness, initiating calls that fail to transmit caller IDs, creating remotely created checks, calling persons on the national Do Not Call Registry, using or obtaining consumer reports for impermissible purposes, making false statements to obtain consumer financial information, and selling or transferring customer data.
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