The Federal Trade Commission has filed contempt charges against a promoter of credit repair and debt relief services and three of his companies, alleging that they continued their deceptive marketing practices in violation of a federal court order. The FTC charged that the defendants tried to take advantage of financially strapped consumers by falsely telling them that almost anyone can qualify for food stamps, and by encouraging them to mislead the government about their finances to qualify for the food stamp program.
As part of the FTC’s ongoing efforts to protect consumers in financial distress, the agency seeks to ban the defendants from selling credit repair, debt relief, or government-related goods or services, and make them pay compensation to consumers.
The FTC charged that Sam Tarad Sky, Allrepco LLC, Credit Restoration Brokers LLC (CRB), and Debt Negotiations Associates LLC (DNA) violated the terms of a March 2010 court order that resolved charges that the defendants deceptively marketed credit repair and debt relief services, and illegally charged an up-front fee for credit repair services. The court order bars them from deceptively marketing any good or service and from violating the Credit Repair Organizations Act.
In violation of the Stipulated Settlement Order, Contempt Defendants Sam Sky and his companies have launched a scheme to defraud economically distressed consumers who may be interested in receiving food stamps. Specifically, taking cynical advantage of the recent economic downturn, Sky and his companies deceptively market a “Food Stamp Eligibility Tool Kit” (“food stamp guide”) to consumers seeking financial help. Sky and his companies market the product as an “automatic,” “hassle free” method by which “virtually everyone” can receive food stamps “without any risk.” In fact, eligibility for food stamps remains strictly limited and the vast majority of Americans do not qualify. To side-step these longstanding limitations, Sky’s “guide” encourages consumers to provide so-called “ideal” information on their food stamp applications thereby misrepresenting their income and expenses. Following such advice is hardly “without any risk.” Rather, it puts consumers at considerable risk of criminal prosecution for public benefits fraud. Finally, Contempt Defendants also violate the Stipulated Settlement Order by unlawfully requiring payment before performance for credit repair services and refusing to make required disclosures about the timing and risk of debt negotiation. – Source
Despite the court order, the FTC alleges that Sky and his companies used two websites to promote a food stamp application guide that falsely promised it would show how “almost everybody” or “virtually everyone” can “legally apply for food stamps” or “legally get [food stamps] for free.” The defendants sold the guide for either a one-time fee of $99, or as part of “Financial Solution Package” that cost consumers a monthly recurring fee of up to $139.
On allrepco.com, Sky and his companies bundle his food stamp guide with other purported products and services in a “Financial Solution Package” for a monthly recurring charge of between $99 and $139.
Specifically, Sky offers nine products and services in this package: credit repair services; debt relief services; credit and debt games; the food stamp guide; found money searches; secretarial services; advice on foreclosures; Section 8 Housing advice; and college financial aid advice. Id. Consumers may purchase the package online merely by providing contact and payment information. As discussed below, Sky takes immediate payment before performing any credit repair services or fully making required debt relief disclosures.
According to the FTC, under longstanding government restrictions, only low-income households can qualify for the federal food stamp program. In the guide, however, the defendants repeatedly tell consumers to provide the government with misleading information in order to inflate their chances of being deemed eligible – advising them, for example, to have high-income residents briefly move out of their household. The FTC charged that following this advice could leave consumers open to civil or criminal charges by the government.
In addition, the FTC charged that the defendants marketed the food stamp application guide throughout the United States, without telling consumers that the guide contained information about the application process in only one state – Florida.
The FTC also alleged that the defendants charged up-front fees for credit repair services, failed to make required disclosures about their debt relief services, and failed to fully report Sky’s business activities, all in violation of the court order.
This [original] case was against Credit Restoration Brokers, Clear Credit Sam Sky, Sam Sky Credit Guy, Debt Negotiation Associates, Sam Tarad Sky, Kurt A. Streyffeler. – Source
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