FTC settles advance fee complaint with debt-relief firm

By Mark Iandolo | Mar 29, 2017

WASHINGTON (Legal Newsline) — A debt-relief company and its principals have been banned from misleading consumers and charging illegal advance fees under a settlement with the Federal Trade Commission (FTC).


The FTC charged United Debt Counselors LLC with exaggerating how much money people could save by using its services. According to a March 7 FTC statement, the company marketed its services via direct mail that appeared like official bank documents. These ads, which reached close to 100,000 consumers per week, claimed customers could halve their credit card debt. United Debt Counselors allegedly echoed these false claims on their website and by phone when consumers called.


The company would allegedly send notaries public with almost no debt relief knowledge to meet with consumers and witness contract signings. The FTC claimed the company charged advance fees that violated the FTC’s Telemarketing Sales Rule. To charge an advance fee, a company must first meet with a consumer face-to-face using an experienced and knowledgeable sales representative.


The FTC also noted that fewer than half of the consumers who paid for services competed the program, and even fewer ended up debt-free after 36 months.


The defendants in the case are United Debt Counselors LLC, also known as United Debt Services LLC and also doing business as Department of Negotiations; David Melrose; Kirk Lanahan; and Corinne Maples.


The FTC voted 2-0 to authorize the staff to file the complaint and stipulate the final order, which was placed in the U.S. District Court for the Eastern District of Texas.

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