Temporary Restraining Order against Debt Settlement Company
Date: Fri, 10/26/2007 - 18:46
[quote]FTC Obtains a Stipulated Temporary Restraining Order, Receiver
and Asset Freeze against debt settlement Company and Others:
FTC v. Edge Solutions, Inc. et al.
On October 11, 2007, the Federal Trade Commission (FTC) obtained a
stipulated temporary restraining order barring misrepresentations,
appointing a temporary receiver, and freezing the assets of Edge
Solutions, Inc. of Delaware, Edge Solutions Inc. of New York, and
Money Cares, Inc., all a/k/a The Debt Settlement Company and a/k/a The
Debt Elimination Center; Pay Help, Inc.; and Miriam Lovinger and
Robert Lovinger. The next step that the FTC is pursuing is to
permanently bar the defendants from further violations, force them
forfeit their alleged ill-gotten gains, and appoint a permanent
receiver. A hearing is scheduled for October 25, 2007.
The lawsuit against Edge Solutions, et al. and the temporary
restraining order, receiver and asset freeze reflect the FTC's
continued focus on challenging conduct in industries that target
financially-distressed consumers that may run afoul of consumer
protection laws. We expect that the FTC – as well as state attorneys
general, other federal and state regulators, and private plaintiffs
(including plaintiffs' class action attorneys) – will continue to
investigate and challenge similar conduct exhibited by other debt
settlement companies, along with other conduct by companies that
target their services at financially-distressed consumers, such as
lead generation, list brokering, telemarketing, credit repair claims,
and consumer privacy policies that are perceived to be non-compliant
with applicable statutes and regulations.
The Edge Solutions' Suit and Stipulated Temporary Restraining Order,
Receiver and Asset Freeze
The FTC brought suit against Edge Solutions et al. on October 1, 2007.
The Edge Solutions case includes allegations that the defendants
operated as a common enterprise. The FTC's complaint alleges that the
defendants deceptively market a "debt settlement" operation that
allegedly failed to provide services it claimed would reduce
consumers' debt, resulting in even more debt for many consumers. The
FTC alleges that this conduct violated Section 5 of the FTC Act.
Specifically, the FTC allegations against the defendants include that
they represented expressly or by implication that:
consumers who purchased the defendant's services would be able to pay
off all of their debts referred to the program for a substantially
reduced amount;
defendants would contact all of the consumers' creditors referred into
the program to negotiate settlements and would begin paying such
creditors within several weeks of the consumers joining the program;
and
defendants would provide personalized, one-on-one financial consulting.
Furthermore, according to the FTC's complaint, since at least 2000,
the defendants have sold debt settlement services through a number of
web sites, offering a "Debt Meltdown Program" they describe as "an
aggressive method of helping consumers out of the debt trap and away
from the bankruptcy path." The FTC also states that the defendants
claim they will negotiate with creditors to enable consumers "to
escape debt at a fraction of the total amount they owe," that
consumers end up repaying only "60 cents for every dollar that is
owed," and that "we can reduce your unsecured debt by up to 60 percent
and sometimes more and have you debt free in 18 to 30 months."
While the FTC did not challenge the defendants' handling and use of
consumer personal financial data, the stipulated temporary restraining
order and relief obtained against Edge Solutions et al. certainly
reflects the Commission's concern regarding this conduct. In
addition, marketing and advertising claims by other companies similar
to that alleged in the Edge Solutions suit has been the subject of
private litigation and state regulatory enforcement actions and
investigations.
The FTC had moved for an expedited hearing for a temporary restraining
order and other relief that had been postponed by a week at the
request of the defendants. Despite the advance notice and additional
time given to the defendants, the resulting Stipulated Temporary
Restraining Order combined with the asset freeze and appointment of a
temporary receiver illustrate the drastic enforcement methods at the
disposal of the FTC.
The FTC has a long history of targeting companies marketing and
advertising to consumers in financial distress – including debt
settlement companies and credit counseling agencies – in this manner.
Not surprisingly, in many instances, the FTC has gone directly to
federal court – without notice to the defendants – and obtained
temporary restraining orders, asset freezes, and receivers, which have
left defendants with few resources to defend themselves.
Venable LLP's Litigation and Credit Counseling & Debt Settlement Practice
Venable LLP's credit counseling and debt settlement practice provides
counseling to credit counseling and debt settlement companies and
their service providers on an array of issues, including conduct that
may be subject to FTC investigation or enforcement. Our practice
group includes numerous seasoned litigators, each with significant
credit counseling and debt settlement industry and FTC litigation
experience.
* * * * *
Attached please find a Microsoft Word version of this alert, a copy of
the Stipulated Temporary Restraining Order, and a copy of the current
docket in this case.
For more information regarding the Edge Solutions Stipulated Temporary
Restraining Order and FTC compliance, please contact either Jeffrey S.
Tenenbaum at 202-344-8138 / [email]jstenenbaum@venable.com[/email] or Jonathan L.
Pompan at 202-344-4383 / [email]jlpompan@venable.com[/email].
To view Venable's index of articles and PowerPoint presentations on
credit counseling and debt settlement industry-related legal topics,
see www.venable.com/ccds/publications.
* * * * *
**********************************************************************
U.S. Treasury Circular 230 Notice: Any tax advice contained in this
communication
(including any attachments) was not intended or written to be used,
and cannot be used, for the purpose of (a) avoiding penalties that may
be imposed under the Internal Revenue
Code or by any other applicable tax authority; or (b) promoting, marketing or
recommending to another party any tax-related matter addressed herein.
We provide this
disclosure on all outbound e-mails to assure compliance with new standards of
professional practice, pursuant to which certain tax advice must
satisfy requirements as to
form and substance.
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you believe you have received this message in error, please notify the
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[/quote]
and Asset Freeze against debt settlement Company and Others:
FTC v. Edge Solutions, Inc. et al.
On October 11, 2007, the Federal Trade Commission (FTC) obtained a
stipulated temporary restraining order barring misrepresentations,
appointing a temporary receiver, and freezing the assets of Edge
Solutions, Inc. of Delaware, Edge Solutions Inc. of New York, and
Money Cares, Inc., all a/k/a The Debt Settlement Company and a/k/a The
Debt Elimination Center; Pay Help, Inc.; and Miriam Lovinger and
Robert Lovinger. The next step that the FTC is pursuing is to
permanently bar the defendants from further violations, force them
forfeit their alleged ill-gotten gains, and appoint a permanent
receiver. A hearing is scheduled for October 25, 2007.
The lawsuit against Edge Solutions, et al. and the temporary
restraining order, receiver and asset freeze reflect the FTC's
continued focus on challenging conduct in industries that target
financially-distressed consumers that may run afoul of consumer
protection laws. We expect that the FTC – as well as state attorneys
general, other federal and state regulators, and private plaintiffs
(including plaintiffs' class action attorneys) – will continue to
investigate and challenge similar conduct exhibited by other debt
settlement companies, along with other conduct by companies that
target their services at financially-distressed consumers, such as
lead generation, list brokering, telemarketing, credit repair claims,
and consumer privacy policies that are perceived to be non-compliant
with applicable statutes and regulations.
The Edge Solutions' Suit and Stipulated Temporary Restraining Order,
Receiver and Asset Freeze
The FTC brought suit against Edge Solutions et al. on October 1, 2007.
The Edge Solutions case includes allegations that the defendants
operated as a common enterprise. The FTC's complaint alleges that the
defendants deceptively market a "debt settlement" operation that
allegedly failed to provide services it claimed would reduce
consumers' debt, resulting in even more debt for many consumers. The
FTC alleges that this conduct violated Section 5 of the FTC Act.
Specifically, the FTC allegations against the defendants include that
they represented expressly or by implication that:
consumers who purchased the defendant's services would be able to pay
off all of their debts referred to the program for a substantially
reduced amount;
defendants would contact all of the consumers' creditors referred into
the program to negotiate settlements and would begin paying such
creditors within several weeks of the consumers joining the program;
and
defendants would provide personalized, one-on-one financial consulting.
Furthermore, according to the FTC's complaint, since at least 2000,
the defendants have sold debt settlement services through a number of
web sites, offering a "Debt Meltdown Program" they describe as "an
aggressive method of helping consumers out of the debt trap and away
from the bankruptcy path." The FTC also states that the defendants
claim they will negotiate with creditors to enable consumers "to
escape debt at a fraction of the total amount they owe," that
consumers end up repaying only "60 cents for every dollar that is
owed," and that "we can reduce your unsecured debt by up to 60 percent
and sometimes more and have you debt free in 18 to 30 months."
While the FTC did not challenge the defendants' handling and use of
consumer personal financial data, the stipulated temporary restraining
order and relief obtained against Edge Solutions et al. certainly
reflects the Commission's concern regarding this conduct. In
addition, marketing and advertising claims by other companies similar
to that alleged in the Edge Solutions suit has been the subject of
private litigation and state regulatory enforcement actions and
investigations.
The FTC had moved for an expedited hearing for a temporary restraining
order and other relief that had been postponed by a week at the
request of the defendants. Despite the advance notice and additional
time given to the defendants, the resulting Stipulated Temporary
Restraining Order combined with the asset freeze and appointment of a
temporary receiver illustrate the drastic enforcement methods at the
disposal of the FTC.
The FTC has a long history of targeting companies marketing and
advertising to consumers in financial distress – including debt
settlement companies and credit counseling agencies – in this manner.
Not surprisingly, in many instances, the FTC has gone directly to
federal court – without notice to the defendants – and obtained
temporary restraining orders, asset freezes, and receivers, which have
left defendants with few resources to defend themselves.
Venable LLP's Litigation and Credit Counseling & Debt Settlement Practice
Venable LLP's credit counseling and debt settlement practice provides
counseling to credit counseling and debt settlement companies and
their service providers on an array of issues, including conduct that
may be subject to FTC investigation or enforcement. Our practice
group includes numerous seasoned litigators, each with significant
credit counseling and debt settlement industry and FTC litigation
experience.
* * * * *
Attached please find a Microsoft Word version of this alert, a copy of
the Stipulated Temporary Restraining Order, and a copy of the current
docket in this case.
For more information regarding the Edge Solutions Stipulated Temporary
Restraining Order and FTC compliance, please contact either Jeffrey S.
Tenenbaum at 202-344-8138 / [email]jstenenbaum@venable.com[/email] or Jonathan L.
Pompan at 202-344-4383 / [email]jlpompan@venable.com[/email].
To view Venable's index of articles and PowerPoint presentations on
credit counseling and debt settlement industry-related legal topics,
see www.venable.com/ccds/publications.
* * * * *
**********************************************************************
U.S. Treasury Circular 230 Notice: Any tax advice contained in this
communication
(including any attachments) was not intended or written to be used,
and cannot be used, for the purpose of (a) avoiding penalties that may
be imposed under the Internal Revenue
Code or by any other applicable tax authority; or (b) promoting, marketing or
recommending to another party any tax-related matter addressed herein.
We provide this
disclosure on all outbound e-mails to assure compliance with new standards of
professional practice, pursuant to which certain tax advice must
satisfy requirements as to
form and substance.
************************************************************************
************************************************************************
This electronic mail transmission may contain confidential or
privileged information. If
you believe you have received this message in error, please notify the
sender by reply
transmission and delete the message without copying or disclosing it.
************************************************************************
[/quote]
Wow, awsome Mike. It is good to know that not only do we have e
Wow, awsome Mike. It is good to know that not only do we have each other here, but the Federal Goverment is listening. I feel very impowered right now.....Oh Vador...Vador..who's my daddy..!?
It's good to know the FTC is on its toes!! Maybe they will go af
It's good to know the FTC is on its toes!! Maybe they will go after other companies who abuse consumers!! Thanks for the post Mike!!..karen
You have no idea of how many called I've when a debtor was telli
You have no idea of how many called I've when a debtor was telling me that they signed up for a program for counseling or settlement and it unded up that they were lied to and was cheated out of thousands of dollars.
I always encourage everyone to research any company they choose to help them with their debt if needed. It is just too important.
