Federal Trade Commission has filed lawsuits against 3 debt relief companies in January 2011 for violating the new settlement laws. It is said that these companies have made false promises to the consumers such as eliminating collection calls and eradicating credit card debts quickly. Reports suggest that the defendants have filed around 8.5 million dollars to settle the charges.

FTC sues debt relief companies

The officials at the FTC have complained that the defendants have adopted inappropriate marketing strategies for making money. They have broadcasted deceiving debt relief service advertisements through electronic media. The commercials were put on air in different languages such as Spanish and English. These advertisements lured consumers into believing that they can reduce their debts by several thousands of dollars by using the debt relief services, which were completely untrue.

It is alleged that the defendants didn’t offer any kind of debt relief services. The main objective of the advertisements was to make the innocent consumers to call a toll-free number. Thereafter, the contact details of the consumers (who called at these numbers) were simply sold to the debt settlement companies as sales leads.

FTC claimed that the defendants used catchy phrases to attract the consumers. The advertisements claimed that the consumers could settle their debts with ease and get rid of the harassing collection calls. But these claims were simply baseless. Apart from that, the defendants were also unable to secure any kind of proof from the companies buying the sales leads that they could fulfill the advertised claims. The defendants simply collected fees from these companies instead of offering any kind of debt relief services. They were paid around $50 to $65 for each and every lead.

The 3 debt relief companies (against whom the complaints were made) have been fined $8.5 million by FTC. In addition, they have also been prohibited from promoting, marketing, or advertising debt relief services in future. They can’t make false claims regarding any type of financial products. Neither can they lie about the terms and conditions of any product. They are also required to preserve the confidential information of the consumers by all means. The officials at the FTC hope that the number of debt relief scams will decrease after taking this strict action against those who violate the rules and regulations over and over again.

Federal Trade Commission has imposed a fine on Allied Interstate collection agency for repeatedly violating the debt collection laws. FTC has taken this step after the collection agency has been reported of violating FDCPA (Fair Debt Collection Practices Act) and FTCA (Federal Trade Commission Act) laws time and again.

FTC fines Allied Interstate for violation of laws

It has been reported that Allied Interstate, Inc has been slapped with a fine by FTC. The Minnesota based collection agency will have to pay a fine of around $1.75 million for collecting money from wrong people, and using aggressive methods when dealing with consumers. FTC has taken this action to ensure that debt collectors check their information before attempting to collect money from the consumers. Collectors will have to pay a heavy penalty if they try to collect money from consumers without verifying their information is correct. Read the rest of this entry »

If you are a regular in our Community, you may have noticed how adamant I am about sending disputes of inaccurate information on your credit report to the Credit Reporting Agency/ies whose report reflects such information.

Is it Really a Waste of Time to Dispute With Credit Reporting Agencies?

If you do not save this info, and merely send them a letter saying basically “this is wrong, change it”, then you just may be at the mercy of an unscrupulous creditor who will just say “it’s accurate”. For instance, one poster on our Forum stated: “I guarantee you that, even if you send the bureau a copy of a PIF letter, the bureau won’t actually change your credit report. In all cases, they forward the dispute to the creditor/data furnisher who is reporting the information. This method of procedure is all that is required of them in the FCRA.” In order for the creditor to merely say “it’s accurate”, they would have to LIE and say that they did not send you the PIF letter (to use the example just cited), which is fraudulent on their part, or they are basically accusing you of fraud.

The Government Fights Back

According to the National Consumer Law Center’s Report Automated Injustice: How A Mechanized Dispute System Frustrates Consumers Seeking to Fix Errors In Their Credit Reports disputes to the CRA were being processed exactly as the above mentioned poster said. It stated: “Despite its importance, the FCRA dispute process has become a travesty of justice. The major credit bureaus (Equifax, Experian, and TransUnion) conduct investigations in an automated and perfunctory manner.”

They aren’t supposed to just pass the dispute on, especially when the consumer is providing documented proof in their defense. The Fair and Accurate Credit Transactions Act of 2003, also known as the FACT Act, was enacted because of this very reason. So even though they may have basically ignored disputes in the past, they are now fair game for a possible lawsuit by the FTC in Federal Court. If the CRA refuses to bend, again, file that complaint with the FTC. The CRAs may have differing information, but they are all beholden to the FTC. After the CRA spurns the heartfelt plea of the wronged consumer, they usually believe that they are beaten by an entity with power over their lives. This, my friends, is the very definition of tyranny.

How a CRA is SUPPOSED to Deal With Your Dispute

The FTC itself has power over the CRAs. The CRAs actually must investigate and take into consideration any documentation that the consumer supplies. According to FTC Reports to Congress on Credit Report Complaint Referral Program (page 2): “Sections 611 and 623 of the FCRA impose dispute investigation and resolution duties on CRAs and those entities that furnish information about consumers to the CRAs. … If a consumer disputes the accuracy of an item of information in his or her file with a CRA, the CRA must (i) complete an investigation of the dispute … (ii) review and consider all relevant information provided by the consumer“* [emphases mine]. The same paragraph continues that the alleged creditor must also investigate. THAT is why I say to always dispute with the CRA, it’s a one-two punch. Of course, first try with the creditor, and if they refuse to correct it, then go this route. That is a total of 3 denials, and you know what they say about 3 strikes.

Again, keep all documentation, you will need it. Send not only a copy of any letters, etc., but also the envelope it was mailed in. If emailed, print out the email with full headers. The more proof you have, the tighter your case is.

Daddy’s Watching!

The FTC randomly audits dispute data in the CRA records, because of complaints to the FTC that the CRAs are not removing info that is inaccurate. If they don’t, the penalties against the CRAs can be up to $2,500 per violation.

The Federal Trade CO-Mission (It Takes 2 – Us & Them)

I keep harping on about the Federal Trade Commission, but, seriously, they do their job very well. Perhaps people have become jaded against any Federal agency after so many reports of incompetence, especially the Katrina fiasco. But every agency is not like that. Some are headed by very dedicated people whose main motive is to defend people against unfair and deceptive acts or practices, and get a paycheck for it too! Win-win! But it takes legitimate and documented complaints for them to open an investigation. They can’t, both logistically and financially, sue every company that some citizen complains against, but a consistent history of similar complaints shows a purposeful flaunting of the law.

The same is also true of debt settlement companies, or that store down the street that sold you defective merchandise and refused to refund your money, or even that judge who rules in the creditor’s favor even though the defendant has a mountain of evidence in their favor. If you feel you have been ripped off, it is your duty as a citizen of this free country to demand a redress of grievances.

FTC Testifies on Efforts to Protect Consumers of Financial Services; Urges New Tools for Stronger Enforcement Authority is an attempt by the FTC for Congress to grant them more power to file charges against these rip-off artists. Right now, they have to file a request with the Dept. Of Justice, and that can run into one heck of a backlog. That’s why it may seem to take awhile before justice is served.

Thus Quoth The Raven: Nevermore

“The price of freedom is eternal vigilance.” (Thomas Jefferson)

“[P]eople have only as much liberty as they have the intelligence to want and the courage to take.” (Emma Goldman)

“So long as the people do not care to exercise their freedom, those who wish to tyrannize will do so; for tyrants are active and ardent…to put shackles upon sleeping men. (Voltairine de Cleyre)

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* See also the FCRA Sections 611 (disputes to the CRA) [15 U.S.C. § 1681i(a)(1)(A)] and 623 (disputes to the alleged creditor) [15 U.S.C. § 1681s-2].