The FTC has filed a complaint against Nelson Gamble & Associates LLC, Jackson Hunter Morris & Knight LLC, BlackRock Professional Corporation, and Mekhia Capital LLC alleging that the companies’ recorded sales pitches claimed to be “public service announcements.” People were told that because President Obama wants to help consumers get out of debt, people can settle for 50% or less of what they owe. The companies also allegedly “spoofed” their identity by transmitting phony caller ID information — meaning that consumers couldn’t figure out who was calling.
In addition to the telemarketing calls, the companies also pitched debt relief services online. One of the companies’ websites claimed over $90 million of debt settled in the past 12 months — and over $800 million since our inception. The companies claimed to use “proven tactical methods to settle debt by 50% to 80% of your total outstanding balances” and told people that “you can be free from debt in three years or less.” In addition, they said lawyers would provide the services. But according to the FTC, the companies settled few, if any, debts for consumers. And that part about lawyers? Not true, says the FTC.
The FTC alleges that the violations didn’t end there. When consumers stayed on the line after the recorded sales pitch or called one of the numbers on the websites, they were transferred to operators who asked for their Social Security numbers, bank account numbers, and security information — all under the pretext that the information was needed to pull the person’s credit report or confirm their debt-to-income ratio.
However, according to the FTC complaint, for people who signed up for the services, the companies debited an up-front fee of $200 or more from their bank accounts within a few days of the phone call and before the companies had settled any of their debts. In numerous other instances, the FTC says the companies took money from the bank accounts of people who hadn’t enrolled in their services.
the FTC says that in many cases, the companies didn’t honor people’s request to cancel the services and continued to take money from their accounts.
The complaint alleges that the companies violated numerous consumer protection laws, including the FTC Act and the Telemarketing Sales Rule, including the Do Not Call Registry, the ban on robocalls, sections making it illegal to transmit deceptive caller ID information, and sections making it illegal to accept fees upfront before settling consumers’ debts. The complaint also alleges violations the Electronic Fund Transfer Act and Regulation E, which bans debits to consumers’ bank accounts on a recurring basis without their written authorization and without providing consumers with a copy of the authorization. A federal judge in California has issued a temporary restraining order against the companies.