FTC Goes After 'Debt Reduction' Companies

The Federal Trade Commission Wednesday said that it had filed charges against a “debt reduction” program that promised consumers with heavy debt loads an option to reduce or eliminate money owed to creditors.

The FTC said in a release that Miriam and Robert Lovinger have marketed the program since at least 2000 using various web sites such as idebthelp.com, moneycares.com, edgesolutions.com, and ontrackmpower.com. The sites offer “an aggressive method of helping consumers out of the debt trap and away from the bankruptcy path.”

When consumers use the phone numbers listed on the site to enroll in the program, they are told that the defendants will obtain settlements that will substantially reduce their debt. Using a direct debit payment from consumers’ bank accounts, the FTC says that the defendants take money from the accounts to supposedly pay the program’s fees as well as make payments to creditors.

The FTC alleges that many of the settlements promised are never initiated. Further, program enrollees are told to sever contact with creditors. Consumers have been complaining that in spite of being enrolled in the program, creditors continue to seek payment and even refer their accounts to collection agencies.

The FTC said that it has requested an expedited hearing for a temporary restraining order. According to a press release, a hearing is scheduled for today.

Representatives of the FTC did not immediately return phone calls.

The action is the latest in a trend by the agency to shut down fraudulent “debt relief” programs that target consumers with heavy debt burdens (“FTC Stops ‘Reduce Debt Now’ Scheme,” 3/29).