Fed Action Halts Debt Relief Marketing Operation
Allegedly made illegal robocalls, debited consumers' bank accounts without their consent
Saturday, September 22, 2012
A federal court has halted a purported debt relief operation that allegedly contacted consumers through recorded telemarketing calls, falsely claimed it would reduce their unsecured debt by 50 percent or more, made unauthorized charges to their bank accounts and called phone numbers listed on the National Do Not Call Registry.
The action, which came at the request of the Federal Trade Commission (FTC), is part of the agency’s efforts to stop scams that target consumers in financial distress and its continuing crackdown on illegal “robocalls.” The court ordered a stop to the defendants’ allegedly deceptive practices and froze their assets pending a trial.
The FTC has brought 88 enforcement actions against 250 corporate and 194 individual defendants involving robocalls and Do Not Call violations, resulting in payments of more than $69 million in civil penalties and equitable monetary relief.
Giving 'false hope'
“Giving people false hope by promising to reduce their debt is bad enough. But stealing their money by debiting their bank accounts without their permission is beyond the pale,” FTC Chairman Jon Leibowitz said. “Consumers can count on the FTC and state Attorneys General to find the bad actors and stop them from doing further harm.”
According to the FTC’s complaint against Jeremy R. Nelson and four companies he controlled -- Nelson Gamble & Associates LLP, Jackson Hunter Morris & Knight LLC, BlackRock Professional Corporation and Mekhia Capital LLC -- the defendants marketed and sold debt relief services via telemarketing and Websites. They promised to settle consumers’ debts for substantially less than they owed and said lawyers would provide the services.
One Website cited in the complaint stated, “Nelson Gamble works with the utmost diligence to obtain the best possible outcome for our clients, with over $90 million of debt settled in the past 12 months -- and over $800 million since our inception . . . ,” noting that it employs “proven tactical methods to settle debt by 50% to 80% of your total outstanding balances. . . . Typically, you can be free from debt in three years or less.”
According to the complaint, the defendants were not lawyers, as they claimed; they settled few, if any, debts for customers; and some consumers who did not order their services found that the defendants had debited money from their bank accounts.
The FTC charged the defendants with violating the FTC Act and the agency’s Telemarketing Sales Rule (TSR) by making false and deceptive claims and by causing consumers’ bank accounts to be debited without their express, informed consent. They also allegedly violated the TSR by charging advance fees for debt relief services, calling phone numbers listed on the National Do Not Call Registry, calling consumers who had told them not to call, failing to transmit caller identification to consumers’ caller ID service, delivering recorded messages without consumers’ prior written consent, repeatedly calling consumers to annoy them and delivering recorded messages that failed to identify the seller, the call’s purpose and the product or service.
In addition, the defendants allegedly violated the Electronic Fund Transfer Act and Regulation E by debiting consumers’ bank accounts on a recurring basis without their written authorization, and without providing consumers with a copy of the authorization.
The FTC also announced it will host a summit on October 18, 2012, in Washington, DC, to examine the issues surrounding the robocall problem. The summit will be open to the public, and will include members of law enforcement, the telemarketing and telecommunications industry, consumer groups and other stakeholders.
It will focus on exploring innovations that could potentially be used to trace robocalls, prevent wrongdoers from faking caller ID data, and stop illegal calls. More information about the summit and a draft agenda will be forthcoming.
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