/>iOn July 14, the U.S. District Court for the District of Arizona granted the Federal Trade Commission’s request for a temporary restraining order against multiple defendants operating a nationwide debt relief scheme. The defendants are alleged to have violated the FTC Act, the Telemarketing Sales Rule (TSR), the Fair Credit Reporting Act (FCRA), the Gramm-Leach-Bliley Act (GLBA), and the FTC’s Impersonation Rule. The court’s order imposed an asset freeze, appointed a temporary receiver, and suspended the defendants’ business operations.
According to the FTC’s complaint, the defendants used deceptive marketing and impersonation tactics to enroll consumers—particularly seniors and veterans—into costly debt relief programs that ultimately left them worse off. The FTC estimates that the scheme extracted approximately $100 million from consumers.
The complaint alleged that the defendants:
- Misrepresented themselves as financial institutions and government agencies. Telemarketing calls and marketing materials allegedly gave consumers the false impression that they were communicating with their banks, credit card issuers, or government offices.
- Promised substantial debt reduction without delivering meaningful relief. The defendants claimed they could reduce unsecured debts by up to 75% but provided little or no actual negotiation or settlement services.
- Collected advance fees in violation of federal rules. Consumers were charged significant up-front fees before receiving any services, in contravention of the TSR.
- Used remotely created checks without obtaining authorization. The defendants initiated withdrawals from consumer accounts using unauthorized payment instruments.
- Accessed credit reports without a lawful purpose. The defendants pulled credit files without a permissible reason, violating FCRA.
- Obtained financial account information through deceptive means. The defendants used false statements to acquire sensitive bank account data, in violation of GLBA §521.
- Placed telemarketing calls in violation of Do Not Call restrictions. The companies contacted consumers listed on the National Do Not Call Registry despite applicable prohibitions under the TSR.
Putting It Into Practice: This case reflects the FTC’s expanded use of the Impersonation Rule and reinforces its longstanding focus on deceptive debt relief schemes that target vulnerable populations. Financial service providers using telemarketing or lead generation services should review their compliance protocols to ensure they are not misrepresenting their identity, misusing consumer data, or engaging third parties that employ deceptive or unauthorized tactics.
