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Home > Debt Relief Industry > FTC Charges Financial Freedom of America, Debt Professionals of America, and Debt Consultants of America with Making Unsubstantiated Claims that They Could Eliminate Consumers’ Debt

FTC Charges Financial Freedom of America, Debt Professionals of America, and Debt Consultants of America with Making Unsubstantiated Claims that They Could Eliminate Consumers’ Debt

As part of its continuing crackdown on scams that target consumers in financial distress, the Federal Trade Commission has charged three debt relief operations with making unsubstantiated claims to lure consumers nationwide into paying thousands of dollars in up-front fees, but failing to reduce credit card debts as promised.

According to the FTC’s two complaints, the defendants made deceptive claims that consumers who enrolled in their programs could eliminate 30 to 60 percent of their credit card debt and be out of debt in 18 to 36 months. The defendants marketed their services via websites and TV and radio ads that urged consumers to call toll-free numbers for a free consultation and to enroll in their debt relief programs. One operation claimed to use “secret programs most credit card companies won’t tell you about.” The other operation touted its “established relationships” with creditors and claimed that its program would “save you literally thousands of dollars.” The defendants charged consumers up-front administrative fees, monthly maintenance fees, negotiation fees, and in some instances, a cancellation fee.

The FTC’s complaints charge that few consumers received the promised results. Many consumers canceled or dropped out of the programs before their debt was reduced because they couldn’t afford to pay the defendants’‘ sizable advance fees and accumulate money to pay off their debts.

Consumers looking for help with credit card debt should be wary of anyone who tells them to stop paying their bills, to pay someone other than their creditors, or to stop talking to their creditors. Consumers should also be careful about paying for financial assistance before they receive it. The FTC recently announced changes to the Telemarketing Sales Rule that prohibit companies that sell debt relief services over the telephone from charging fees before they settle or reduce a customers’ credit card or other unsecured debt. This ban on advance fees protects all consumers who enroll in a debt relief service after October 27, 2010, and specifies that fees for debt relief services may not be collected until:

  • the debt relief service successfully settles or changes the terms of at least one of the consumer’s debts;
  • there is a settlement agreement, debt management plan, or other agreement between the consumer and the creditor that the consumers has agreed to; and
  • the consumer has made at least one payment to the creditor as a result of the agreement negotiated by the debt relief provider.

The new provisions of the Rule also prevent debt relief providers from front-loading their fees if a consumer has enrolled multiple debts in one debt relief program. Click here for more information about the advance-fee ban. In addition, the Rule requires debt relief providers to make truthful and substantiated claims about their services. The FTC will actively enforce the Rule and these new provisions, as will the states, which also have enforcement authority under the Telemarketing Sales Rule.

The defendants in one of the two cases announced today are Financial Freedom of America, Inc., now known as Financial Freedom Processing Inc., Corey Butcher, and Brent Butcher. The second case names Debt Consultants of America Inc., Debt Professionals of America Inc., Robert Creel, Corey Butcher, and Nikki Creel, also known as Nikki Vrla. – Source

FTC Charges Financial Freedom of America, Debt Professionals of America, and Debt Consultants of America with Making Unsubstantiated Claims that They Could Eliminate Consumers’ Debt
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FTC Charges Financial Freedom of America, Debt Professionals of America, and Debt Consultants of America with Making Unsubstantiated Claims that They Could Eliminate Consumers’ Debt by

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Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
  • Mary

    Financial Freedom of America is a scam run by Yaron KImelman(Chicago, Illinois), Eitan KImelman (Brooklyn, NY) and Abraham KImelman(Brookline, MA). The telephone numbers for this bogus company are 214 276-0070 and 214 276-0062. These numbers are owned by TW Telecom -TX, a company owned by Eitan Kimelman.
    The brother Eitan KImelman owns Dollar Phones Enterprises Inc dba DPE out of Dallas, TX. He mails and emails forms to the Colorado PUC and then scams the residents of California. See postings under Financial Freedom of America. A Desist and Refrain Order was issued 8/24/09 against a Corey T. Butcher but this is the fake name they run this company under.
    Abraham KImelman owns the grids – see Ambient Corporation in Massachusetts..
    They websites are Yaron KImelman’s. They follow a pattern like all his other websites.
    This is one of their many scams across this great nation and someone in authority needs to ask for their license but most times they operate without a license.

  • Mike Reilly

    Stay tuned as this case will set precedence!

    I hope management has put away for a rainy day because this will be costly. Reading through the allegations, one would think the FTC is throwing everything at this, including the kitchen sink. One of interest is the comment about; on their Web sites, defendants claim to have “established relationships” with creditors, well if they have settled 150 million in debt is it reasonable to assume they have “established relationships”? What if they are working directly with debt buyers and have certain exclusive relationships? At the end of the day, it all comes down to words and certain claims.
    From a marketing perspective, industry participants get it but, we’re offering this up to John Q. Public and he doesn’t!
    Example:
    Instead of “Get out of Debt in 18 to 36 months” which to John Q. implies a guarantee,
    How about: “Program Terms from 18 to 36 months” In my opinion John Q. says “what’s that about “
    Or: “Our programs are designed to help you reduce principle, interest and fees owed to your creditor through the art of negotiation. This process, while not easy, can typically take between 18 and 36 months depending on many individual factors facing you as the debtor, including but not limited to; the hardship that caused or will cause a contractual default with your creditors, an analysis of you current financial condition and your ability to save funds each month for the purpose of paying negotiated settlements and service fees.

    In my opinion there is no need to talk about or make predictions on percentages such as 30% to 60% savings or anything else for that matter.

    Just a thought.

    Michael Reilly, CDS
    Emerge America

  • Mike Reilly

    Stay tuned as this case will set precedence!

    I hope management has put away for a rainy day because this will be costly. Reading through the allegations, one would think the FTC is throwing everything at this, including the kitchen sink. One of interest is the comment about; on their Web sites, defendants claim to have “established relationships” with creditors, well if they have settled 150 million in debt is it reasonable to assume they have “established relationships”? What if they are working directly with debt buyers and have certain exclusive relationships? At the end of the day, it all comes down to words and certain claims.
    From a marketing perspective, industry participants get it but, we’re offering this up to John Q. Public and he doesn’t!
    Example:
    Instead of “Get out of Debt in 18 to 36 months” which to John Q. implies a guarantee,
    How about: “Program Terms from 18 to 36 months” In my opinion John Q. says “what’s that about “
    Or: “Our programs are designed to help you reduce principle, interest and fees owed to your creditor through the art of negotiation. This process, while not easy, can typically take between 18 and 36 months depending on many individual factors facing you as the debtor, including but not limited to; the hardship that caused or will cause a contractual default with your creditors, an analysis of you current financial condition and your ability to save funds each month for the purpose of paying negotiated settlements and service fees.

    In my opinion there is no need to talk about or make predictions on percentages such as 30% to 60% savings or anything else for that matter.

    Just a thought.

    Michael Reilly, CDS
    Emerge America

  • Andy Faria

    It’s interesting that one of the defendants was at one point an executive member of USOBA.

    I wonder how he got through their certification process? Oops.

  • http://northeast-properties.com Andy Faria

    It’s interesting that one of the defendants was at one point an executive member of USOBA.

    I wonder how he got through their certification process? Oops.

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