Debt-Negotiation Defendants Agree to Settle FTC Charges in Nationwide Operation that Led Many Into Financial Ruin

Four debt-negotiation companies have agreed to settle Federal Trade Commission charges that they violated federal law by falsely claiming they could reduce consumers’ debt by up to 60 percent, leading many people into financial ruin and bankruptcy. The proposed settlements bar them from engaging in further violations of the Federal Trade Commission Act.

The settling defendants were among three individuals and seven companies charged by the FTC with deceptive and unfair practices in violation of the FTC Act (see press releases dated September 21, 2006 and December 5, 2006). All of the defendants in the nationwide operation were charged with misrepresenting how much they could reduce consumers’ debt, and not adequately disclosing the likelihood that consumers would be sued if they took the defendants’ advice and stopped paying creditors. The FTC also charged the defendants with not disclosing that consumers’ account balances would grow from interest, interest rate increases, late fees, and other charges; and falsely advising consumers that negative information that appeared on their credit report as a result of participating in the defendants’ program would be removed upon completion of the program. More...