A debt relief scheme that scammed people for millions of dollars with the false hopes of killing or reducing their credit card debts has temporarily stopped operating, thanks to the FTC. The people involved were John Preston Thompson, Sean Austin, and John Steven Huffman and their related companies.
Samuel Levine, who is currently a Director at the FTC for the Bureau of Consumer Protection, had a comment on the matter. “The elderly were targeted in this debt relief scheme, who were already having major issues with resolving their outstanding debts, and the defendants pushed them down the debt hole even further.”
This debt relief scheme was staged through multiple companies that spanned from Wyoming to Nevada, New Mexico, and Tennessee. This deception began in 2019, and the FTC claims[1] they used these companies and several deceptive tactics that are illegal to scam their targets.
Deceptive enrollment fees: Any consumer who went for these services were charged a fee upon signing up for the program and going through an enrollment process. These could be in the thousands of dollars, with no reduction in their debts, and all based on their available credit at the time of enrollment. They were lied to upfront about the nature of these fees and what they were going to be put toward. As if that wasn’t enough, to stay on this debt relief scheme, they were charged on a monthly basis up to $35 with the idea that it was to monitor their credit.
Telemarketing that was considered deceptive: Regardless of which company being in violation of the Telemarketing Sales Rule[2] by the FTC. The telemarketers made false claims of who they were actually partnered or affiliated with, typically picking out banks or credit card companies without any proof. Then they claimed that the program would help to eliminate their total credit card debits within 18 months at the latest.
Debt relief promises that had no proof behind them: Another claim by the FTC was the fact that the marketing of all these services referenced federal programs for debt relief that didn’t exist or made false claims that the debt owed needed to be validated so thus it wasn’t owed, which isn’t a real item.
The servicing companies told anyone who actually signed up for these criminal programs to halt payments on the credit cards themselves as well as to not speak to the credit card companies when contacted. What these clients were never told were the consequences. According to the FTC, these consequences could be getting into larger amounts of debt, damaged credit scores, and the possibility that the credit card companies could sue them to collect.
It may even stop these clients from getting any credit in the future. As a result, the FTC got its request[3] approved for a federal court to help stop operations for these debt relief scheme scams. It was a 4-0 vote by the Commission to authorize this complaint to be filed, which happened in the U.S. District Court for the Middle District of Tennessee.
Keep in mind this is just the first step to uncovering the issue, but the overall case will still need to be handled in court.
