credit counseling

FTC Busts Bogus Debt Counseling Company

The Federal Trade Commission has busted yet another operation that preyed upon cash‑strapped consumers who were seeking relief from their credit card debts.

Just recently, a U.S. District Court halted operations, at the request of the FTC, from an agency that collected about $12 million from consumers by promising individuals that the company could allegedly obtain rates as low as zero percent.

The companies who have been named as defendants in the FTC complaint are: Southeast Trust, LLC, which was also formerly known as The Debt School, LLC. They’ve also done business as Financial Freedom Credit Counseling. The company’s principal operator is a named Paul A. Wexler.

Essentially, the court order puts a halt to the business’s illegal conduct and freezes the operation’s assets. Meantime, the FTC is moving forward with the case.

According to FTC regulators, these defendants allegedly charged people illegal up‑front fees ranging anywhere from $250 to $400. (It’s against the law for debt relief firms to impose up-front fees on consumers, prior to any services being rendered).

To make matters worse, the defendants didn’t even provide any services. They made calls, robo‑calls really, under the pretext of getting people to use debt consolidation services, or to use so‑called “Certified Credit Counselors.”

They asked consumers to divulge their bank account numbers, and other personal sensitive data according to the FTC complaint. People were also essentially told: “Don’t worry. Your account won’t be debited until you actually sign a contract and enter into debt relief services.”

But in many instances, the FTC says, people’s bank accounts actually were in fact debited without their permission. So, in a nutshell, the FTC is saying that these defendants committed multiple federal violations.

Allegedly, they violated the Federal Trade Commission Act, the Telemarketing Sales Rule, as well as other laws.

So, this is one instance that illustrates that you really do have to be careful with the debt relief operation that you choose. Just because someone calls you up and says: “You’ve been pre‑approved or approved to consolidate your credit cards. You can get a low interest rate, maybe even zero percent. This is not a loan,” et cetera, that doesn’t mean that the offer is legitimate.

I don’t want to paint all debt help firms as con artists. That’s definitely not the case.

Many debt relief agencies, credit counseling firms, or debt management programs can legitimately offer you help. And they may even be able to get your interest rates knocked down to the very low single digits, or maybe even zero percent.

Nevertheless, the onus is upon you as a consumer to check people out carefully, and certainly to check out any debt help company before you do business with them.

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