FTC ANNOUNCES $21 MILLION PAYOUT FROM ONLINE PAYDAY LENDING COMPANIES

FROM:  U.S. FEDERAL TRADE COMMISSION 
 Online Payday Lending Companies to Pay $21 Million to Settle Federal Trade Commission Charges that They Deceived Consumers Nationwide
Lender Will Waive $285 Million in Other Charges

Two payday lending companies have settled Federal Trade Commission charges that they violated the law by charging consumers undisclosed and inflated fees. Under the proposed settlement, AMG Services, Inc. and MNE Services, Inc. will pay $21 million – the largest FTC recovery in a payday lending case – and will waive another $285 million in charges that were assessed but not collected.

“The settlement requires these companies to turn over millions of dollars that they took from financially-distressed consumers, and waive hundreds of millions in other charges,” said Jessica Rich, Director of the Bureau of Consumer Protection. “It should be self-evident that payday lenders may not describe their loans as having a certain cost and then turn around and charge consumers substantially more.”

The FTC filed its complaint in federal district court in Nevada against AMG and MNE Services and several other co-defendants, in April 2012, alleging that the defendants violated the FTC Act by misrepresenting to consumers how much loans would cost them. For example, the defendants’ contract stated that a $300 loan would cost $390 to repay, but the defendants then charged consumers $975 to repay the loan.

The FTC also charged the defendants with violating the Truth in Lending Act (TILA) by failing to accurately disclose the annual percentage rate and other loan terms and making preauthorized debits from consumers’ bank accounts a condition of the loans, in violation of the Electronic Funds Transfer Act (EFTA). MNE Services lent to consumers under the trade names Ameriloan, United Cash Loans, US Fast Cash, Advantage Cash Services, and Star Cash Processing. AMG serviced the loans.

In May 2014, a U.S. district court judge held that the defendants’ loan documents were deceptive and violated TILA, as the FTC had charged in its complaint.

In addition to the $21 million payment and estimated $285 million in waived charges, the settlement also contains broad prohibitions barring the defendants from misrepresenting the terms of any loan product, including the loan’s payment schedule, the total amount the consumer will owe, the interest rate, annual percentage rates or finance charges, and any other material facts. The settlement order prohibits the defendants from violating TILA and EFTA.

The Commission vote approving the proposed stipulated final order was 5-0. It was filed in the U.S. Court for the District of Nevada on January 15, 2015. The FTC’s action remains in litigation as to defendants SFS, Inc., Red Cedar Services, Inc., AMG Capital Management, LLC, Level 5 Motorsports, LLC, LeadFlash Consulting, LLC, Black Creek Capital Corporation, Broadmoor Capital Partners, LLC, Scott A. Tucker, the estate of Blaine A. Tucker, Don E. Brady, and Robert D. Campbell, and relief defendants Park 269, LLC and Kim C. Tucker.

NOTE: Stipulated orders have the force of law when approved and signed by the District Court judge.

ASSETS FROZEN OF DEBT COLLECTOR ACCUSED OF USING LIES AND THREATS

FROM:  U.S. FEDERAL TRADE COMMISSION 

Court Halts Debt Collector’s Operations, Freezes Assets

Defendants Behind Buffalo, New York-based Operation Used Lies and Threats to Pursue Fraudulent Debt Collection Strategy, FTC and New York Attorney General Allege

At the request of the Federal Trade Commission and the New York Attorney General’s Office, a U.S. district court halted a Buffalo, NY-based debt collection operation, froze the operation’s assets, and appointed a temporary receiver to take over the defendants’ business pending trial.

In a joint complaint, the FTC and New York Attorney General charged the operation with using lies and threats against consumers in violation of federal and state law. The defendants misrepresented that consumers had committed check fraud or another criminal act; falsely threatened to arrest or imprison consumers, sue them, garnish their wages, or put a lien on their property; failed to back up their claims that consumers owed the debt; charged illegal fees; and improperly revealed consumers’ debts to third parties, according to the complaint.

Operating the scheme since February 2010, the defendants have collected at least $8.7 million dollars in payments for purported debts, according to the complaint. The joint complaint charged that the defendants’ tactics violated the Federal Trade Commission Act, the Fair Debt Collection Act and various New York state laws.

“These debt collectors continued to harass consumers and violate the law after the validity of the debt was called into question, and after the New York Attorney General’s office ordered them to stop,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection. “By working together with our state partners, we can leverage our resources to stop these illegal tactics.”

“All too often, innocent New Yorkers are relentlessly harassed by predatory, abusive debt collectors,” Attorney General Eric T. Schneiderman said. “My office, along with partners like the Federal Trade Commission, will keep fighting to protect hardworking consumers and put a stop to unfair financial bullying once and for all.”

Part of the FTC’s continuing crackdown on scams that target consumers in financial distress, the agencies have charged three individuals – Joseph C. Bella, III, Diane Bella, Luis A. Shaw – and 9 interrelated companies they control. Going by various names including National Check Registry, the operation began using another name – eCapital Services, LLC – to evade detection and continue its illegal behavior after signing an agreement with New York State authorities in October 2013 that prohibited it from violating federal and state debt collection laws, according to the complaint.

Also, according to the complaint, the defendants:

told one consumer in Washington State that they would have the “Washington County Police” issue a warrant for her arrest, and another serving in the military that they would bring an action against him under the Uniform Code of Military Justice;
said the only way to avoid arrest, imprisonment, lawsuits, wage garnishments, and seized assets would be to make an immediate payment over the phone;
continued to accuse consumers of check fraud and other crimes even after they produced evidence showing they didn’t owe the debt in question;
contacted friends, family members, and co-workers of consumers whom they claimed owed a debt, and in some cases, not only revealed the supposed debt but also said the consumers had committed check fraud, and would be arrested or imprisoned if the debt was not paid;
added an illegal $8 “processing fee” when consumers made payments on supposed debts over the phone;
failed to provide consumers with debt collection notices and disclosures that are required under state and federal law, making it difficult for consumers to determine whether they owed the debt, and how they could dispute its validity; and
continued trying to collect a debt from a consumer who had discharged the debt in bankruptcy.

In addition to Joseph and Diane Bella, Luis A. Shaw, National Check Registry, LLC, and eCapital Services, LLC, the complaint names as defendants Check Systems, LLC, Interchex Systems, LLC, Goldberg Maxwell, LLC, Morgan Jackson, LLC, Mullins & Kane, LLC, Buffalo Staffing, Inc., and American Mutual Holdings, Inc.

The Commission vote authorizing the staff to file the complaint was 5-0. The FTC and the New York Attorney General’s Office filed the complaint and the request for a temporary restraining order in the U.S. District Court for the Western District of New York on June 23, 2014. The court granted the plaintiffs’ request for a temporary restraining order with an asset freeze, the appointment of a receiver, immediate access to the business premises and limited discovery on June 24, 2014, and it approved a stipulated preliminary injunction on July 10, 2014.

NOTE: The Commission files 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 case will be decided by the court.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them.

CALIFORNIA-BASED BUSINESS CHARGED BY FTC WITH SELLING BOGUS DEBT RELIEF SERVICES

FROM:  FEDERAL TRADE COMMISSION 

FTC Charges Operation with Selling Bogus Debt Relief Services

DebtPro 123 LLC Billed Consumers as Much as $10,000, But Did Little or Nothing to Settle Their Debts

The Federal Trade Commission charged an Irvine, California-based scheme with billing consumers as much as $10,000 after making deceptive claims that it would provide legal advice, settle consumers’ debts, and repair their credit in three years or less.  Instead, the scheme often left consumers in financial ruin, the agency charged.

The FTC alleged that the DebtPro 123 LLC defendants told consumers to stop paying and communicating with their creditors. As a result, although consumers hired the defendants in hopes of improving their financial situation, their debt often increased, causing them to lose their homes, have their wages garnished, lose their retirement savings, or file for bankruptcy, according to the complaint. Although the defendants promised to refund unsatisfied customers, they rarely did.

“These defendants said they would get consumers out of debt, but instead they bilked them out of thousands of dollars, often leaving them worse off than they were before,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection.

Ringleader Bryan Taylor and three other individuals, along with DebtPro 123 and five other companies marketed their bogus debt relief services through telemarketing calls, website ads, promotional videos and marketing companies that acted as lead generators, according to the complaint.  Promising that in as little as 18 months consumers could “become debt free and enjoy financial independence,” the defendants claimed their “Legal Department” would “leverage their existing relationships with all of the major creditors to negotiate the best possible resolution.” The defendants claimed that consumers could reduce the amount they owed by 30 to 70 percent.

The complaint alleges that the defendants violated the Federal Trade Commission Act,  the Telemarketing Sales Rule, and the Credit Repair Organizations Act, not only through their false promises, but also by providing their affiliate marketing companies with deceptive materials to deceive consumers and by collecting an advance fee for their bogus debt relief services.

For more information about how to handle robocalls and debt relief offers, see Robocalls, and Avoiding Debt Relief Scams.

The Commission vote to file the complaint against  Bryan Taylor; Kara Taylor; Ryan Foland; Stacey Frion; DebtPro 123, LLC; BET Companies Inc.; Redwave Management Group Inc.; Allstar Debt Relief LLC (California); Allstar Debt Relief LLC (Texas); and Allstar Processing Corp. was 4-0-1, with Commissioner McSweeny not participating. The FTC filed the complaint in the U.S. District Court for the Central District of California on May 2, 2014.

NOTE:  The Commission files 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 case will be decided by the court.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them.

TWO CAR DEALERS TO SETTLE FTC CHARGES OF FALSE ADVERTISING

FROM:  FEDERAL TRADE COMMISSION 
FTC Halts Two Automobile Dealers' Deceptive Ads

Two car dealers from Maryland and Ohio have agreed to settle the Federal Trade Commission’s charges that they falsely advertised the cost or available discounts for their vehicles. The settlements, part of the FTC’s continuing crackdown on deceptive motor vehicle dealer practices, prohibit the dealers from advertising discounts or prices unless the ads clearly disclose any qualifications or restrictions.

The FTC charged that Timonium Chrysler, Inc., of Cockeysville, Md., violated the FTC Act by advertising discounts and prices that were not available to a typical consumer. Ganley Ford West, Inc., in Cleveland, also is charged with misrepresenting that vehicles were available at a specific dealer discount, when in fact the discounts only applied to specific, and more expensive, models of the advertised vehicles.

“Buying a car is a huge financial commitment, and people often calculate what they can pay down to the penny,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “They should be able to depend on the dealers to provide truthful information, and they can depend on the FTC to enforce consumer protection laws on the lot.”

Timonium Chrysler’s website touted specific “dealer discounts” and “internet prices,” but allegedly failed to disclose adequately that consumers would need to qualify for a series of smaller rebates not generally available to them. The complaint further alleges that, in many instances, even if a consumer qualified for all the rebates, the cost of the vehicle was still greater than the advertised price.

Ganley Ford advertised its discounted vehicles on its website and in local newspapers, and it allegedly failed to disclose that its advertised discounts generally only applied to more expensive versions of the vehicles advertised.

The proposed orders settling the FTC's charges against Timonium Chrysler and Ganley Ford are designed to prevent them from engaging in similar deceptive advertising practices in the future. The two auto dealers cannot advertise prices or discounts unless accompanied by clear disclosures of any required qualifications or restrictions. The auto dealers are also barred from misrepresenting:

the existence or amount of any discount, rebate, bonus, incentive, or price;
the existence, price, value, coverage, or features of any product or service associated with the motor vehicle purchase;
the number of vehicles available at particular prices; or
any other material fact about the price, sale, financing, or leasing of motor vehicles.
The dealers must maintain and make available copies of all advertisements and promotional materials to the Commission for inspection upon request for the next five years, and they are required to comply with the FTC’s order for 20 years.

Consumers in the market for a new or used vehicle should read the FTC’s car ads and buying and owning a car.

The Commission vote to issue the administrative complaints and accept the consent agreement packages containing the proposed consent orders for public comment was 4-0. The agreement will be subject to public comment for 30 days, beginning today and continuing through October 3, 2013, after which the Commission will decide whether to make the proposed consent order final. Interested parties can submit written comments electronically for Timonium Chrysler and Ganley Ford or in paper form.

Comments submitted in paper form should be mailed or delivered to: Federal Trade Commission, Office of the Secretary, Room H-113 (Annex D), 600 Pennsylvania Avenue, N.W., Washington, D.C., 20580. The FTC is requesting that any comment filed in paper form near the end of the public comment period be sent by courier or overnight service, if possible, because U.S. postal mail in the Washington area and at the Commission is subject to delay due to heightened security precautions.

NOTE: The Commission issues an administrative 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. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of up to $16,000.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC's online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics.  Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.