Debt relief scam ends in $ 7.9 million judgment to settle FTC charges

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The Federal Trade Commission (FTC) today announced that the head of a fictitious debt relief operation has accepted a judgment of more than $ 7.9 million to settle the charges that he had deceived consumers and billed them thousands of dollars without providing anything in return.

In a complaint filed in May 2014, the FTC alleged that DebtPro 123 LLC the defendants falsely told consumers that their programs would pay off all their debts and repair their credit. Then they told them to stop paying and contacting creditors which resulted in increased debt and deterioration in credit due to accrued interest, late fees, lawsuits with creditors, foreclosed wages and sometimes bankruptcy.

Under proposed stipulated court orders, program leader Bryan Taylor and co-defendants Ryan Foland, Stacey Frion and Kara Wilbur Taylor, are prohibited from selling debt relief products or services. They are also prohibited from making unfounded claims for any product or service, and from making material misrepresentations, directly or through others, about any product or service. In addition, they are prohibited from: telemarketing without keeping certain records and without making certain disclosures; take advantage of customers’ personal information; and not properly disposing of customer information.

In the proposed order stipulated against Bryan Taylor, which imposes a judgment representing the full amount of the harm suffered by the consumer – more than $ 7.9 million – Taylor admits the allegations made against him in the FTC complaint. The proposed orders against Foland, Frion, and Kara taylor impose the same judgment, which will be suspended upon delivery of certain goods by Foland. Full judgments will become due immediately if Foland, Frion or Kara Taylor are found to have misrepresented their financial situation. The FTC seeks default judgments against the six corporate defendants: DebtPro 123 LLC, Allstar Processing Corp., Allstar Debt Relief LLC, Allstar Debt Relief LLC, Redwave Management Group Inc. and BET Companies Inc.

The Board’s vote allowing staff to file the proposed stipulated final orders was 4-0. The orders are pending in the United States District Court for the Central District of California. (The FTC notes that stipulated final orders become law when approved and signed by the district court judge.)

InsideARM Perspective

We recently published an article about scams similar to debt relief. In the article, insideARM editor Aaron Steinberg described a relatively new technique in The Suspicious Debt Repair Company’s Handbook: The Mass Debt Validation Request. Collectors may have no choice but to invest resources in dealing with spurious debt validation requests, a technique that can often make matters worse for collectors and consumers.

Just as DebtPro’s instruction to the consumer to stop paying and communicate with the creditor results in accrued interest, fees, lawsuits and other consequences, mass validation requests cause delays and obstacles. to communication that might otherwise resolve debts.

This article also refers to another enforcement action, this one by the CFPB (under UDAAP rules), against World Law Group.

It will be necessary to follow the trend to see if another category of supervised entities emerges for the CFPB. For now, the Bureau offers this advice consumers to deal with debt relief (and debt settlement) companies. Currently, debt settlement is listed in the complaints portal under “other financial services”. Debt relief, it seems, is so new that it was not added to the portal as a term.



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