FTC Settlement Bans Marketers from Debt Relief Business

Three companies and their owner, who allegedly falsely claimed they could help consumers quickly eliminate their credit card debts and stop calls from debt collectors, have been banned from the debt relief business under a settlement with the Federal Trade Commission.

According to the FTC’s complaint, the defendants, doing business as The Hermosa Group and Financial Future Network, deceptively advertised debt relief services, in English and Spanish radio and television ads, claiming that consumers could pay thousands less than what they owe on credit cards. The defendants themselves did not provide any debt relief services. Instead, the advertising was meant only to generate sales leads – the names and phone numbers of consumers who called the defendants’ toll-free number – which the defendants sold to debt relief providers or other sales lead generators.

The defendants’s ads included sales pitches such as:

• “With one simple call you can eliminate your debt in a fraction of the time and for less than you owe.”
• “Find out today how quickly and easily you can eliminate your debt.”
• “Stop the harassing calls!”

The FTC alleges that the defendants’ claims that they could reduce debts substantially, settle debts quickly, and stop calls from debt collectors, were false or unsubstantiated, and that the defendants did not obtain adequate evidence from sales lead buyers that they could achieve the promised results. The complaint also alleges that the defendants falsely claimed they provided the debt relief services they advertised.

The defendants are Jonathan Greenberg, Hermosa Group LLC, Media Innovations LLC, and Financial Future Network LLC. The settlement order imposes a $8.5 million judgment that will be suspended when the defendants pay $500,000. The full judgment will be imposed immediately if they have misrepresented their financial condition.

In addition to banning the defendants from the debt relief business, the settlement order prohibits them from making unsubstantiated claims about financial related products or services, or misrepresenting material facts about any product or service. The order also prohibits them from disclosing or otherwise benefitting from customers’ personal information, and failing to dispose of this information properly.

The FTC recently amended its Telemarketing Sales Rule to require debt relief companies to make certain disclosures and prohibit them from making false claims or collecting fees before delivering the services they promise. Because the defendants’ ads predated these amendments, the FTC did not allege any violations of the Rule in this case.

The Commission vote authorizing staff to file the complaint and approving the proposed stipulated final order was 5-0. The documents were filed in the U.S. District Court for the District of Maryland. The proposed stipulated final order is subject to court approval.

Click here for more information about settling credit card debts.

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 defendants have actually violated the law. Stipulated final orders are for settlement purposes only and do not constitute an admission by the defendants of a law violation. A stipulated final order requires approval by the court and has the force of law when signed by the 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 1,800 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.