FTC: Texas Company Charged $1.3 Million in Illegal Up-Front Fees
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FTC: Texas Company Charged $1.3 Million in Illegal Up-Front Fees

March 25, 2015

A Texas-based company and its owners have settled Federal Trade Commission (FTC) charges that they charged $1.3 million in illegal up-front fees for services they never provided.

According to the 2014 complaint, Home Relief Foundation charged fees for services that they falsely promised would reduce consumers' mortgage interest rates or monthly payments. The settlement order prohibits the defendants from selling debt relief products or services and from misrepresenting any material facts related to the sale of any products or services.

The FTC says the operation preyed on financially distressed homeowners by making promises that because of the defendants' affiliation with attorneys, connection to a government program, knowledge of the industry, and relationships with mortgage lenders, they would be able to lower consumers' interest rates and monthly mortgage payments.

Defendants often told consumers that they could afford the defendants' fees by stopping payment of their mortgages – without disclosing that if they did so, consumers would risk losing their homes or damage their credit ratings. The defendants illegally charged upfront fees ranging from $500 to $4,000, with the typical charge being about $2,550.

The stipulated court order settling the FTC's charges bans defendants from advertising, marketing, promoting or selling any secured or unsecured debt relief product or service; prohibits them from misrepresenting information to consumers regarding any financial products or services, and broadly prohibits misrepresentations related to any products or services.

Finally, the order imposes a judgment of $1,270,439 that represents the total amount of consumer injury during the three-year operation. The judgment will be partially suspended, due to the defendants' inability to pay, after they have paid the FTC approximately $68,000.