FTC Alert: Debt-Relief Company and Principals Banned from Selling Debt-Relief Services and Telemarketing
In the most recent of a string of strong FTC enforcement actions in the debt collection field, a settlement was approved between the Federal Trade Commission (FTC) and a debt-relief company (and its three principals) that included an outright ban on the defendants’ sale of debt-relief services and telemarketing of any products or services.
On September 10, 2013, the court approved and signed a stipulated order against Innovative Wealth Builders, Inc. (IWB) and its three Florida-based principals, which settled FTC allegations that the defendants violated the FTC Act by falsely promising to substantially reduce consumers’ credit card interest rates, misrepresenting refund policies, and billing consumers without authorization. The complaint also alleged that the defendants violated the FTC’s Telemarketing Sales Rule by misrepresenting the debt relief services they were selling, charging a fee before providing these services, and billing consumers without their express informed consent.
The settlement with IWB and the principals prohibits them from making any material misrepresentations in advertising, marketing, promotion, sale offers, or sale of any financial related product or service. The order also includes a $9.9 million judgment against the defendants jointly and severally.
Moving forward, the FTC plans to continue litigation against Independent Resources Network Corporation, the payment processor that allegedly assisted and facilitated the scam.
What does this mean?
The FTC remains a regulatory force to be reckoned with, even amidst increasing activity from other agencies and regulatory bodies in the consumer financial services arena. This action comes on the heels of a number of recent FTC settlements in the debt collection space, including $1.1 and $2.5 million civil penalties against debt collectors in January, an $800,000 penalty against a debt buyer and debt collection law firm in March, and a $3.2 million civil penalty against a debt collector in July. Although many companies operating in the space are currently focusing on the Consumer Financial Protection Bureau, FTC enforcement actions like this one demonstrate the Commission’s commitment to protecting and utilizing its oversight powers within the industry.
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