National Debt Consolidation Scheme Misleads Consumers About Costs, Benefits, and Nonprofit Status, FTC Says

A nationwide debt consolidation business violated federal law by misleading and illegally telemarketing millions of consumers, according to the Federal Trade Commission, which is seeking consumer redress in federal district court, a freeze of the operation’s assets, and an end to its illegal practices.

According to the FTC’s complaint, a scheme that bills itself as “America’s Premier Debt Consolidation Company” is violating the FTC Act and the FTC’s Telemarketing Sales Rule (TSR), led by a Florida attorney who is using a sham nonprofit company to violate telemarketing rules that exempt legitimate nonprofit entities.

According to the complaint, the defendants have violated the FTC Act and the TSR by falsely claiming that they are a nonprofit entity; that the only cost for their services is a monthly administrative fee that is less than $49 and/or that there is no application fee; that their services will result in estimated savings of a specified amount, typically several thousand dollars; and that their services will reduce the consumer’s monthly payment or total debt, or will improve their credit rating. In fact, the complaint states, in addition to a monthly administrative fee, the defendants charge a fee equal to the monthly payment, which is collected from the consumer’s first payment; they overstate the estimated savings, if any; their services do not necessarily reduce the consumer’s monthly payment or total debt; and they do not provide any service to improve, or prevent deterioration of, a customer’s credit record, history, or rating.

The complaint alleges that the defendants also violated the TSR by failing to disclose the program’s total costs, and by telling consumers that certain payments are refundable without disclosing all the limitations of the program’s refund policy. The defendants’ other alleged TSR violations are calling telephone numbers listed on the Do Not Call Registry, calling consumers who have stated they do not wish to receive such calls from the defendants, failing to pay the fee to access the Registry, and “abandoning calls.”

According to the complaint, the defendants have used computerized telemarketing services for “voice broadcasting,” the delivery of recorded messages to telephone answering machines and voice mail services. The TSR requires that such calls answered by a person be connected to a live representative within two seconds. This restriction on abandoning calls by hanging up or playing a recording when someone answers applies to calls selling goods or services, and calls for charitable contributions.

As noted in the complaint, one telemarketer the defendants used is The Broadcast Team (TBT). TBT was sued by the U. S. Department of Justice in December 2005 at the FTC’s request for TSR violations. According to the complaint, TBT caused almost 11 million abandoned calls on the defendants’ behalf. Urging consumers to contact the defendants, one recorded message delivered to answering machines stated, “We are a nonprofit agency that can consolidate your credit cards, lower your monthly payments dramatically, and reduce your interest rates down to as low as 1.5 percent.”

The defendants also use mail and Web sites (www.expressconsolidation.org and www.expressconsolidation.com) to get consumers to contact them, the complaint alleges. Once consumers provide information about their debts, defendants’ agents give consumers a specific monthly payment they would have to make to cover payments to creditors and the program’s fee. These total monthly payments are typically several hundred dollars.

The defendants are attorney Randall L. Leshin, Randall L. Leshin, P.A., d/b/a Express Consolidation, Express Consolidation Inc., and Consumer Credit Consolidation Inc. and its president, Maureen A. Gaviola. The Commission vote to authorize staff to file the complaint was 5-0. The complaint was filed in the U.S. District Court for the Southern District of Florida.

NOTE: The Commission authorizes the filing of a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant has actually violated the law. The case will be decided by the court.

Copies of the complaint are available from the FTC’s Web site at http://www.ftc.gov and its Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information on 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at http://www.ftc.gov. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database help consumers spot, stop, and avoid them. To file a complaint in English or Spanish (bilingual counselors are available to take complaints), or to get free information on any of available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.


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