FTC, Debt Relief Company Reach Settlement over Misleading Consumers
The company allegedly made misleading claims about their ability to reduce and eliminate consumers' credit card debt
A debt relief company that allegedly misled consumers and charged illegal advance fees has reached a settlement with the Federal Trade Commission (FTC).
According to a complaint filed by the agency, United Debt Counselors LLC exaggerated how much money people could save using its services. The company utilized direct mailings that looked like official documents from a bank or attorney, and claimed that typical customers would have their credit card debt cut in half and become debt-free within 36 months. These misleading forms reached up to 100,000 consumers each week.
In addition, the company used similar claims on their website and in calls to consumers.
The FTC claims that interested consumers were told to meet with an experienced sales representative. However, the company sent notaries, equipped with little knowledge of the products and services offered, to show a sales video and witness contract signings. The company also typically charged advance fees before they negotiated any savings on credit card debts.
Fewer than half of those who purchased the services completed the program, and even fewer were debt-free at the end of 36 months, according to the FTC.
Under the conditions of the settlement, the defendants are banned from making unsubstantiated claims about the effectiveness of their program. The order imposes a $9 million judgment that represents the amount of alleged harm to consumers. It will be partially suspended upon payment of $510,000. If the defendants break any conditions of the order, the full $9 million will be due.