FTC Settlements Put Debt Relief Operations Out of Business

The FTC has settled two actions that charged marketers with deceptively claiming they could reduce consumers’ credit card interest rates. Both operations allegedly made deceptive telemarketing calls, called consumers on the Do Not Call Registry, and used illegal robocalls. The settlements will ban all of the defendants from selling debt relief services.

Advanced Management Services

The FTC charged that Advanced Management Services NW LLC, and several co-defendants called consumers and claimed that they could negotiate with credit card issuers to substantially lower the consumers’ credit card interest rates. They allegedly delivered prerecorded “robocalls” with messages urging consumers to “press one” to speak with someone. Many consumers believed the calls came from their credit card company. The defendants charged consumers up to $1,590 and promised a refund if they failed to deliver at least $2,500 in interest rate savings. But, instead of arranging reduced interest rates, the defendants sent consumers instructions to pay down their credit card debts early to save money on interest. Consumers who demanded refunds allegedly were denied outright, got the run-around, or had a $199 “nonrefundable fee” deducted from their refund.

Under two settlement orders, all of the Advanced Management Services defendants are banned from selling debt relief services. The defendants, who were based in Washington and Texas, are also prohibited from misrepresenting material facts about any good or service, selling or using customers’ personal information, failing to properly dispose of customer information, and collecting payments from their debt relief customers.

The order against PDM International Inc., also doing business as Priority Direct Marketing International Inc., and William D. Fithian, also bans them from telemarketing and from violating the FTC’s Telemarketing Sales Rule, and imposes a $13.8 million judgment. The order against Advanced Management Services NW LLC, also doing business as AMS Financial, Rapid Reduction Systems, and Client Services Group; Rapid Reduction System’s LLC; Ryan David Bishop; and Michael L. Rohlf; imposes an $8.1 million judgment. Both judgments, which represent the total amount of money consumers lost, will be suspended when the defendants have surrendered virtually all of their assets, including several luxury cars, a boat, jet skis, and ATVs. The full judgments will become due immediately if the defendants are found to have misrepresented their financial condition.

The FTC acknowledges the assistance of the Better Business Bureau of Eastern Washington, North Idaho, and Montana, and the BBB of Fort Worth, Texas; the U.S. Postal Inspection Service; the Bedford, Texas, Police Department; and the attorneys general of Illinois, Minnesota, North Carolina, North Dakota, Washington, and West Virginia.

Dynamic Financial

In a second case, the FTC alleged that Dynamic Financial Group and other defendants told consumers that, for an up-front fee of up to $1,995, they could save consumers thousands of dollars by reducing their credit card interest rates, and help them pay off their debts faster. The FTC further charged that the defendants promised, falsely, a full refund if consumers did not save a “guaranteed” amount – typically $2,500 or more. However, the defendants allegedly did not negotiate lower interest rates for consumers or failed to provide refunds.

Under five settlement orders in this case, all of the defendants are banned from selling debt relief services. These defendants, who are based in Canada, Florida, and New Jersey, also are prohibited from misrepresenting material facts about any good or service, violating the Telemarketing Sales Rule, collecting payments from their debt relief customers, using or selling customers’ personal information, and failing to properly dispose of customer information.

The order against 2145183 Ontario, Inc., also doing business as Dynamic Financial Resolutions Inc.; The Dynamic Financial Group (U.S.A.) Inc.; R&H Marketing Concepts Inc.; America Freedom Advisors Inc.; Joseph G. Rogister; and Christopher M. Hayden also bans them from robocalling and imposes an $8.3 million judgment that will be suspended due to the defendants’ inability to pay.

The order against Thriller Marketing LLC, Dwayne J. Martins, and John L. Franks Jr. imposes a $4.9 million judgment that will be suspended when Martins has surrendered the proceeds from selling a 2005 BMW 645 and Franks has surrendered the proceeds from selling two business condominiums in Tampa. The order against Frank Porporino Jr. also bans him from robocalling and imposes an $8.3 million judgment that will be suspended when he has surrendered certain assets. In each instance, the full judgment will become due immediately if the defendants are found to have misrepresented their financial condition.

The orders against Michael Falcone and Sean Rogister also ban them from robocalling and impose judgments of $93,137 and $90,473, respectively, which must be paid immediately.

On April 27, 2011, a default judgment was entered against Alpha Financial Debt Group Inc. That order imposed a $8.68 million judgment and banned the company from robocalling. Litigation will continue against the remaining defendant, Philip N. Constantinidis.

The Commission vote approving the Advanced Management Services proposed consent judgments was 3-1-1, with Commissioner Rosch dissenting and Commissioner Brill recused. The FTC filed the proposed consent judgments in the U.S. District Court for the Eastern District of Washington. The court entered the consent judgments on April 27, 2011, and May 3, 2011. The Commission vote approving the Dynamic Financial proposed consent judgments was 5-0. The FTC filed the proposed consent judgments in the U.S. District Court for the Northern District of Illinois, Eastern Division, where they were entered by the Court on April 27, 2011.

Law enforcement organizations at the international, federal, state, and local levels provided valuable investigative assistance in bringing this action. The FTC would like to thank the following for their help: The U.S. Postal Inspection Service; the Florida Department of Agriculture and Consumer Affairs; and the Toronto Strategic Partnership, which includes as member agencies the Competition Bureau Canada, the Toronto Police Service Fraud Squad – Mass Marketing Section, the Ontario Provincial Police Anti-Rackets Section, the Ontario Ministry of Consumer Services, the Royal Canadian Mounted Police, and the United Kingdom’s Office of Fair Trading. Valuable assistance also was provided by the Better Business Bureaus of Central, Northern & Western Arizona; San Diego; and Metropolitan New York.

Information is available regarding credit repair and repairing your own credit.

NOTE: These consent judgments are for settlement purposes only and do not constitute an admission by the defendants that the law has been violated. Consent judgments have the force of law when approved and signed by the District Court judge.

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 Web site provides free information on a variety of consumer topics. Like the FTC on Facebook and follow us on Twitter.