As an affiliate marketer, it’s imperative that you stay up to date with the latest FTC actions against online advertisers. You want to look out for trends, and you also want to be informed when any offers you might be running have attracted unwanted attention from the FTC. Be aware; it’s your best defense.
Today the FTC today charged four companies and their principals, Miriam and Robert Lovinger, with deceptively marketing a “debt settlement” operation that failed to provide services it claimed would reduce consumers’ debt, resulting in even more debt for many consumers. The FTC has requested an expedited hearing for a temporary restraining order.
According to the FTC’s complaint, since at least 2000 the defendants have sold debt settlement services through the Web sites idebthelp.com, moneycares.com, edgesolutions.com, and ontrackmpower.com, offering a “Debt Meltdown Program” they describe as “an aggressive method of helping consumers out of the debt trap and away from the bankruptcy path.”
The complaint alleges that consumers who call the defendants’ toll-free number are told that the defendants will obtain settlements that will substantially reduce their debt. The defendants allegedly promise to negotiate with creditors and begin making payments to them within several weeks after consumers join their program, and to provide personalized financial counseling. As noted in the complaint, consumers allegedly are told to set up a direct debit from their checking account for deposit into a bank account established by the defendants, who will debit their fees and pay creditors. They also are told to have no further contact with their creditors, and to stop paying them immediately, enabling the defendants to negotiate for them.
The defendants allegedly often fail to contact each creditor as promised, and consumers often continue hearing from creditors about their debts. According to the complaint, in some instances the defendants fail to negotiate settlements with all of consumers’ creditors and don’t pay them, resulting in wage garnishment or debt collection agency action. When consumers tell the defendants that they have received a creditor’s summons, they allegedly are told not to worry, that it is just a “scare tactic.” In some instances, the complaint states, creditors sue these consumers, who have to pay the cost of the creditors’ litigation.
The defendants are charged with violating the FTC Act by allegedly misrepresenting that consumers who purchase their services will be able to pay off all of their debts referred to the defendants’ program for a substantially reduced amount, that the defendants will negotiate settlements with creditors and begin paying them within several weeks after consumers join the program, and that they will provide one-on-one financial consulting.
On October 4, the court will hold a hearing requiring the defendants to show cause why a temporary restraining order barring misrepresentations, appointing a temporary receiver, and freezing the assets of Edge Solutions, Inc. of Delaware, Edge Solutions Inc. of New York, and Money Cares, Inc., all a/k/a The Debt Settlement Company and a/k/a The Debt Elimination Center; Pay Help, Inc.; and Miriam Lovinger and Robert Lovinger should not be entered. The FTC will seek to permanently bar the defendants from further violations and make them forfeit their ill-gotten gains.
If you’re running debt reduction offers, now would be a good time to take a look at the BBB ratings of your advertisers. Check around on the web and do a simple search to see if people are complaining extensively about the companies whose offers you run. The FTC is obviously looking into this area, and if you’re running offers, now is the time to be especially cautious.
As side note, you should be aware that the FTC was assisted by the Better Business Bureau Serving Metropolitan New York, in bringing this case. So pay attention to those BBB complaints. Even if you’re not paying attention, the FTC clearly is.
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Come back to the iLegal column every week as we get specific about the rules, regulations, laws and trends that affect the online advertising industry. Each week we discuss important legal issues, talk about how to avoid the pitfalls, and cover the breaking legal and regulatory advertising industry news.
Legal Disclaimer: Information conveyed in this column is provided for informational purposes only and does not constitute legal advice. These materials do not necessarily reflect the opinions of Digital Moses, and is not guaranteed to be complete, correct, or up-to-date. The column is provided for "information purposes" only and should not be relied upon as "legal advice." This information is not intended to substitute for obtaining legal advice from an attorney. No person should act or rely on any information in this column without seeking the advice of an attorney.
Mark Meckler is the General Counsel for UniqueLeads.com, Inc., and Unique Lists, Inc. Mark sits on the eCommerce and Technology Committee of the Association of Corporate Counsel, and is a member of the International Association of Privacy Professionals.
Copyright 2007 Mark J. Meckler
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