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.
From the Complaint
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:
- Cook: 800 Credit Card Debt can quickly help you reduce or even eliminate your debt.
- Cook: But by calling 800 Credit Card Debt now, we’ll help you eliminate fees and penalties, reduce your interest rates, lower your monthly payments, or even eliminate your debt completely. Cook makes this statement while sitting behind a stack of money that gets smaller with each statement and then, with a flash, disappears.
- Cook: Over the years we’ve helped thousands of people reduce their credit card debt fast. On screen the words “We’ve Helped Thousands Nationwide” appear.
- Cook: Get rid of your credit card debt once and for all.
- Cook: Day in and day out, we help …regular people who got in over their heads in credit card debt.
- These debt reduction programs currently help thousands of consumers repay their credit card debt. S. Todd Cook, Debt Expert & Co-Author ‘Road to Debt Freedom.’
- Hi. I’m Todd Cook, president of Debt.com. Year after year we have remained America’s most trusted provider of debt reduction solutions, helping thousands of people just like you reduce, settle, or even eliminate their credit card and tax debt…We can help. I guarantee it.
- 800 Credit Card Debt is a reputable leader, helping over 100,000 struggling Americans find solutions to their credit card debt problems.
- Let us help you settle your credit card debt today for thousands less than you owe.
- Because if you owe $5,000 or more, we at 800 Credit Card Debt have secrets to help you eliminate your debt by up to 60%. Yes, up to 60%.
- We’re 800 Credit Card Debt, America’s leader in helping settle debt. If you have $5,000 or more in debt, we have programs available to help you eliminate your debt by up to 60%. That’s right, up to 60%.
- Debt.com: the first comprehensive solution to reducing, and eliminating, ALL your personal debt.
- Debt.com is the answer to reducing and eliminating your credit card debt. On screen the words “Reduce and eliminate your debt” appear.
- Consumer Testimonial: Because of Debt.com, we’re able to keep our house. Consumer Testimonial: I heard a radio ad for Debt.com telling people how they can help reduce their debt up to 60 percent and save them thousands of dollars…[she describes calling the company] Why, why didn’t I call sooner? It is going to save me thousands.
[Debt.com] is a free service.to find the best possible solution to settle your credit card debts once and for all, eliminating your debts by up to 60%.
- Consumer Testimonial: They negotiated my payments down substantially, from $300 a month to $135 a month.
- Get Debt Free.
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:
- For years we’ve helped people like you eliminate debt quickly and quietly.
- But with one phone call, you’ll receive a free consultation to help you regain control by cutting your debt fast … Settle your debt now with a free and confidential consultation.
- [Y]ou can finally get the help you need to get out of debt faster than you ever imagined.
- It’s easy. It’s fast.
- Consumer Testimonial: Credit card companies used to hound me! Thanks to 1 800 Credit Card Debt, I lowered my debt, my interest rate, and my monthly payment. On screen the words “Got Out Of Debt Fast” appear.
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:
- No more late payments, no more collections calls, no more sleepless nights.
- Stop the harassing phone calls and notices now.
- They’ll work on your behalf to stop the harassing phone calls and end the sleepless nights.
- Consumer Testimonial: Debt.com stopped the calls and reduced my payments…I got my life back.
- No more harassing collection calls. No more sleepless nights.
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:
- The following is a public announcement… Americans who are behind on their credit card payments must take action immediately. If YOU have ten thousand dollars or more in credit card debt, a new relief program is now available. . . This relief program is now available for members of the public in dire need of debt relief. . . The call and consultation are free to the public and completely confidential, courtesy of Debt.com.
- The following is a public announcement. . . Those Americans who are behind on their credit card payments and/or carry a burden of unsecured debt must take action immediately. Ifyou are one ofthe affected parties, call … immediately for free help and consultation•.. This relief program is now available for members of the public in dire need of debt relief. The call and consultation are free to the public and completely confidential, courtesy of 800 Credit Card Debt… Again, this is a public announcement…Affected parties must take immediate action. The public may call the toll-free relief program number now for your free consultation.
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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