Antitrust Law Daily Debt relief scam operators banned from industry, ordered to pay nearly $1.8M
Friday, September 23, 2016

Debt relief scam operators banned from industry, ordered to pay nearly $1.8M

By E. Darius Sturmer, J.D.

The federal district court in Santa Ana, California, has entered an order permanently banning the operators of an alleged scam "mortgage assistance relief service" from the loan modification and debt relief businesses, the FTC announced yesterday. The court’s order also imposed a monetary judgment of $1,784,864—the full amount of money that consumers lost to the scam—against five defendants, and prohibited them from misrepresenting any products or services in the future (FTC v. CD Capital Investments, LLC, FTC File No. 132 3289, Civil Action No. 8:14-cv-01033-JLS-RNB).

The FTC brought the action in 2014, alleging that the defendants ran two phony debt relief services—"2Apply" and "UW Solutions"—built on false claims and affiliations. According to the Commission, the defendants falsely promised their services could lower consumers’ mortgage payments and interest rates or prevent foreclosure, pretended to be affiliated with a government agency or consumers’ lenders or servicers, and illegally charged advance fees.

In the permanent injunction and order, the court acknowledged its entry of summary judgment against the principal individual defendant earlier this year and its default judgment against the other four defendants—an individual and three corporate entities—in a separate order. The court had found that the principal knew about the false claims and directed the illegal scheme, which violated the FTC Act and Mortgage Assistance Relief Services Rule.

The operators are now prohibited from making misrepresentations concerning financial products and services, such as the terms or rates that are available for any loan or other extension of credit; the savings associated with the loan or other extension of credit; the ability to improve or otherwise affect a consumer’s credit record, credit history, credit rating, or ability to obtain credit; or that a consumer will receive legal representation. In addition, the defendants are banned from making misrepresentations concerning other products or services.

Litigation remains ongoing against one individual defendant in the matter.

MainStory: TopStory ConsumerProtection FederalTradeCommissionNews

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