FTC Requests Shutdown of Fake Credit/Debt Scheme

FTC Requests Shutdown of Fake Credit-Debt Scheme

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Five Legal Terms Every Business Owner Should KnowThe Federal Trade Commission is joining forces with a federal court to put an end to a credit-related scam.

Targeting financially distressed consumers, this scam is perpetuated by phony debt relief/credit repair programs, who allegedly made false statements that they were funded by the federal government, even touting an endorsement by President Obama.

This probe examines operators of two websites that were allegedly full of misrepresentations, claiming to be overseen by the government agency monitoring projects for the American Recovery and Reinvestment Act of 2009.

Beyond claiming associations and endorsements from other government agencies, including the Department of the Treasury, the complaint alleges that YouTube videos were created to include a personal endorsement from the President saying, “I approve this message.”

The scam included fake “representatives” contacting consumers regarding their outstanding debt, thus acquiring account information. These “representatives” would arrange bogus electronic payments, giving consumers the impression their debts were paid. They would then tell consumers to pay the “service charge” via Western Union or Money Gram. Once done, they would keep the service charge and reverse payments originally made to consumers, leaving the consumers without the promised debt relief.

The charges include two counts of violating FTC rules on the prohibition of deceptive acts and practices as well as two other violations.

The court was asked to halt the scam and implement a permanent order stopping the defendant’s activities, thereby requiring them to give back all of their ill-gotten gains.