The Federal Trade Commission has charged the National Consumer Council (NCC) with defrauding consumers and violating the do-not-call rule, in its first such action to date.
The agency is seeking millions of dollars in damages on behalf of NCC’s customers.
One May 3, a U.S. district court judge in California issued a temporary restraining order barring the NCC’s activities and appointed a temporary receiver.
NCC operated a complex web of companies, left pre-recorded messages on home answering machines claiming it was a nonprofit organization that will stop creditors’ collection efforts and significantly reduce consumers’ debt, according to the FTC.
What’s more, the defendants also allegedly called consumers who registered on the National Do Not Call Registry and continued to call consumers who previously stated that they do not wish to receive calls from NCC, in violation of the Telephone Sales Rule.
“NCC was calling people they shouldn’t have been calling, and claiming things they shouldn’t have been claiming,” said Howard Beales, director of the FTC’s Bureau of Consumer Protection at a press conference Wednesday.
Beales noted that the FTC has so far has received about 1,000 complaints about NCC and but only about 400 complaints about the do-not-call list violations.
“The overwhelming majority of legitimate companies are complying with the Do Not Call Registry,” said Beales.
According to the FTC, consumers responding to solicitations from NCC were encouraged to enroll in a debt negotiation program, which actually caused many of them to file for bankruptcy.
The FTC further alleged that the defendants took hundreds of dollars from consumers’ monthly payments as fees, which they did not always disclose, and that consumers’ monthly payments will not be applied to their trust accounts until these fees are paid in full.
“The company did not use any of the money it collected to help pay down debts until after their fees were satisfied,” said Beales.
In addition, the defendants failed to disclose other negative consequences, including that their accounts will become delinquent, that late fees, penalties, and interest may accrue on their debt, that creditors may still sue to collect on debts, and if a judgment is obtained may garnish consumers’ wages. In addition, when defendants negotiate a reduced debt amount, a negative “settled for less than full amount” notation may appear on their credit reports, according to the FTC.
Named as defendants are National Consumer Council, an Arizona corporation; National Consumer Council, a California corporation; National Consumer Council, a Nevada corporation; London Financial Group; National Consumer Debt Council, LLC; Solidium, LLC d/b/a Solidium Credit Recovery Services; United Consumers Law Group; J.P. Landis, LLC; Financial Rescue Services, Inc.; Signature Equities, LLC; M&L Springfield Trust; PC Hailey Trust; Via Lido Trust; Walter L. Haines a/k/a Walter L. Hainowitz; Paul Kardos; Walter Joseph Ledda; Harvey Warren a/k/a Harvey W. Zvansky; Martha K. Levitsky a/k/a Martha E. Kerchen and Mary Beth Harper a/k/a Mary Beth Scholz.
According to news reports, NCC had no immediate comment.
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