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Surprises in the garden as fall approaches

FTC asks court to shut down fake debt relief, credit repair scam that claimed it was endorsed by Pres. Obama

Debt relief1The Federal Trade Commission asked a federal court Friday to shut down a scam that targeted financially distressed Americans by pitching a phony debt relief and credit repair program. The program falsely claimed it was provided and funded by the federal government and endorsed by Pres. Barack Obama.

The scam

The FTC’s lawsuit targets the operators of two websites that allegedly contained misrepresentations about the fake program, which they called the “Bill Payment Government Assistance Program.”

The sites claimed that the program was governed by the Recovery Accountability and Transparency Board, a government agency formed to oversee projects funded by the American Recovery and Reinvestment Act of 2009.

The defendants claimed affiliations with and/or endorsements from the Recovery Board, the Treasury Department, and other federal agencies, the lawsuit alleges. And, YouTube videos created by the scam’s operators included a fake personal endorsement from the President with an audio recording of him saying, “I approve this message.”

The lawsuit also alleges that the defendants offered up to $75,000 in debt relief to consumers, along with promises that consumers’ credit scores would “increase within 30 days.”

Consumers contacting the scammers, according to the lawsuit, were told that in exchange for an advance “service charge” of $900 to $1,100, the defendants would pay off the consumers’ debts.

Scammers would ask consumers for details of their outstanding debt, including account numbers, and then arrange bogus electronic payments that gave consumers the impression their debts were being paid, according to the lawsuit.

The scammers would then tell consumers to pay the “service charge,” typically through money transfer services such as Western Union or MoneyGram. After consumers paid the charge, the scammers would then reverse the payments made to consumers’ bills, leaving consumers without the promised debt relief or improvements to their credit scores or limits.

Action sought

The FTC’s lawsuit charges the unnamed defendants with two counts of violating the FTC Act’s prohibition on deceptive acts or practices, as well as two counts of violating the Credit Repair Organizations Act’s prohibitions on collecting advance fees before providing credit repair services and making untrue or misleading representations about their services.

The lawsuit asks the court to take steps to halt the scam immediately, as well as for a permanent order stopping the defendants’ activities and requiring them to give up their ill-gotten gains.

Copyright 2014, Rita R. Robison, Consumer Specialist

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