http://www.ftc.gov/opa/2007/03/debtset.htm "For Release: March 27, 2007 FTC Stops â??Reduce Debt Nowâ?? Scheme False Promises Led Many Consumers Deeper Into Debt As requested by the Federal Trade Commission, a judge has temporarily halted an operation that falsely claimed it could reduce consumersâ?? credit card interest rates or the total amount of their credit card debt, leading many people into even more debt. The FTCâ??s complaint alleges that since 2004 the defendants have sold debt reduction services through Web sites and television and radio advertisements with claims such as â??Reduce Debt Now,â? â??Eliminate Harassing Calls,â? and â??Itâ??s Free.â? When consumers call a toll-free number, they are encouraged to enroll in a â??debt consolidation programâ? if their unsecured consumer debt is up to one month overdue, or to enroll in a â??debt settlement programâ? if overdue more than a month. According to the complaint, the defendants promise to consolidate the consumerâ??s debts and negotiate with creditors for lower interest rates, such as â??between zero and 9 percent,â? or lump-sum settlements, such as â??fifty cents on the dollarâ? or â??50 to 60 percentâ? of the consumerâ??s total unsecured debt. They allegedly fail to obtain the promised debt reductions in violation of Section 5 of the FTC Act, and many of their clients experienced more debt due to accumulated interest, late fees, and finance charges. The complaint also alleges that, during initial telephone sales, the defendants assert that consumers will not have to pay up-front fees before the defendants begin obtaining the promised debt relief. They also represent that participation in their program will stop creditors from calling or suing them to collect debt. Instead, the Commission alleges, they generally require consumers to pay, in monthly payments, eight percent of the consumerâ??s total debt before the defendants contact creditors. The complaint also alleges that the defendants often do not contact creditors or debt collectors at all, and that consumers who enroll in the program continue to receive collection calls. On March 22, 2007, the court issued a temporary restraining order against Debt Set Inc. (â??Debt Set Coloradoâ?), Debt-Set (â??Debt -Set Nevadaâ?), Resolve Credit Counseling Inc., William Riggs, Michelle Tucker a/k/a Michelle Mangan, Lee Tucker a/k/a Leo Mangan, and Isaac Khan a/k/a Issac M. Khan or Ishaq Mohammad Khan. The order freezes the individual defendantsâ?? assets and appoints a temporary receiver over the corporate defendants. ..."
What about the other "debt settlement" companies? Are they still operating business as usual or do they now have to calm down their redirect? All of them make the same claims or even promise more reduction of debt (after the fees are paid of course).
