Four Aleged Debt Negotiators Settle With FTC
Four alleged debt-negotiation telemarketers have agreed to settle Federal Trade Commission charges that they falsely claimed they could reduce consumers’ debt by up to 60% percent, leading many people into financial ruin and bankruptcy.
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, according to the FTC
Named as defendants were: National Support Services LLC, Homeland Financial Services LLC, Financial Liberty Services LLC, and United Debt Recovery LLC, according to the FTC.
This settlement requires the defendants to pay funds held by the receiver and contains record-keeping provisions to allow the Commission to monitor compliance with its order, according to the FTC.
In two related settlements reached in Sept. 2007, the two men who founded and controlled the four companies paid judgments totaling $110,000. Dennis Connelly, who paid $45,000, was banned from telemarketing, and Richard Wade Torkelson paid $65,000, according to the FTC.
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, continued the Commission.
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.
According to the FTC, this proposed settlement resolves litigation with the remaining defendants in the case and bars them from falsely representing that enrolling in a debt-negotiation program is likely to enable consumers to pay off their credit-card or other unsecured debts for a substantially reduced amount; that their creditors are likely to negotiate settlements under which they will accept substantially less than the amount owed; that debt negotiators can negotiate better settlements with creditors than consumers or that debt negotiators have an established relationship with creditors that gives them an advantage in negotiating favorable settlements.
The defendants also are barred from falsely representing that negative information that appears on a consumer’s credit report as a result of participating in a debt-negotiation program will be removed upon completion of the program; that any such negative effect on a credit rating, credit score or credit report is likely to be minimal or short-term; that creditors are unlikely to sue consumers who participate in a debt-negotiation program or otherwise fail to make minimum monthly debt payments; or that participating in a debt-negotiation program is likely to end most or all harassment or contact from creditors, according to the FTC.
