In order to learn lessons on what to avoid I wanted to take a close look at the statements by the Federal Trade Commission that they made in their recent complaint against Debt.com, Debt.com Marketing, Media Choice, 800 Credit Card Debt, and Stephen Todd Cook.
Defendants are lead generators that target the millions of Americans who are struggling to pay their credit card debt. Defendants disseminate advertisements claiming that Defendants will obtain for their customers settlements o f their debts, enabling those customers to pay thousands o f dollars less than they owe. In fact, Defendants simply sell the consumer leads generated by their advertisements to other lead generators or to debt settlement companies and provide none of the promised services.
Since at least February 2005, Defendants have advertised debt settlement services to consumers across the country through television and radio advertisements using the Debt.com and 800 Credit Card Debt brand names and through websites such as 800CreditCardDebt.com and Debt.com. Defendant Cook developed, created, reviewed or approved the Debt.com and 800 Credit Card Debt advertisements. Defendants’ broadcast advertisements direct consumers to call a toll-free telephone number for assistance with their credit card debt. Consumers who call the toll-free number are immediately and automatically routed to third-party companies as leads. Consumers also can submit their contact information through an online form on Defendants’ websites, and third-party companies
purchase these leads from Defendants. The third-party companies that purchase Defendants’ leads are typically debt settlement providers or other lead generators or lead brokers that re-sell the leads.
Defendants do not provide debt settlement services to consumers, do not enroll consumers in debt settlement programs, and do not collect any fees from consumers. Instead, Defendants collect fees exclusively from the third-party companies that purchase their leads. The third-party companies pay Defendants approximately $10 to $80 for each lead generated through toll-free telephone calls and approximately $20 to $35 for each lead generated online.
In a debt settlement program, the debt settlement provider typically urports to negotiate settlements with creditors to settle consumers’ debts for less than they owe. Consumers who enroll in debt settlement programs usually stop making any payments to their creditors, often at the direction ofthe provider, and instead make monthly payments to the provider. During the period in which Defendants have advertised debt settlement services, consumers often have paid the provider’s fees in advance of receiving any debt settlement services and frequently also paid the provider periodic maintenance and other charges.
Defendants’ advertisements claim that Defendants provide debt settlement services to consumers and that Defendants’ services are part o f a public, non-commercial program. Defendants’ advertisements also claim that consumers who use the services promoted in Defendants’ advertisements will substantially eliminate or reduce consumers’ debts, will obtain these results quickly or immediately, and will not receive calls from their creditors or debt collectors.
Defendants’ advertisements have claimed that 800 Credit Card Debt and Debt.com are debt settlement companies and that their services have helped thousandsofconsumerssubstantiallyreduceoreliminatetheirdebt. In many of
these advertisements, Defendant Cook personally appears and identifies himself as he owner ofthe company. Defendants’ advertisements make statements such as:
Defendants’ advertisements also have claimed that consumers who use the services promoted by Defendants will have their debts settled quickly or immediately, through statements such as:
Defendants’ advertisements also have claimed that consumers who use the services promoted by Defendants will not receive calls from their creditors or debt collectors, through statements such as:
Defendants also have solicited consumers using official-sounding advertisements that purport to be about a public, non-commercial program, when in fact the advertisements are commercial in nature and are designed to induce consumers to contact Defendants, thereby allowing Defendants to generate leads. Defendants then transfer these leads to commercial debt settlement providers or other lead generators or lead brokers that resell the leads. These ads include statements such as:
Several ofDefendants’ advertisement contain statements which purport to be actual and genuine testimonials from customers of Debt.com or 800 Credit Card Debt. In many instances, the purported customers appear on-screen and make statements to convey the impression that consumers can successfully and quickly reduce or eliminate their debts or put an end to debt collection calls by using Defendants’ purported debt settlement services. The purported customers, however, are not in fact customers of Debt.com or 800 Credit Card Debt and their testimonials are not actual and genuine.
Defendants do not provide debt settlement services, and their services are not part of a public, non-commercial program. In addition, at the time they disseminated their advertisements, Defendants did not possess any substantiation for their representations that they (or any other company) will substantially eliminate or reduce consumers’ debts, achieve these results quickly or immediately, or eliminate the calls consumers receive from creditors and debt collectors. In fact, Defendants sought no information from the companies to which they sold their leads as to whether the ultimate debt settlement providers who receive those leads provide the services or results that Defendants represented. In most cases, Defendants did not even know to which debt settlement providers consumers ultimately were referred, because Defendants often sold leads to other lead generators or lead brokers whose businesses involved the further resale of such leads to debt settlement providers.
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