FTC: Debt program misleads consumers

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A nationwide debt consolidation business violated federal law by misleading and illegally telemarketing to millions of consumers, according to the Federal Trade Commission, which is seeking consumer redress in federal court and a freeze on the operation's assets.

The commission alleges that a scheme billing itself as "America's Premier Debt Consolidation Company" violates the FTC Act and the FTC's Telemarketing Sales Rule, using a sham nonprofit company to violate telemarketing rules that exempt legitimate nonprofit entities.

"If the facts are true, this is a classic violation of Section 5 of the FTC Act, being a deceptive act or practice," said Joseph J. Lewczak, a partner at Davis & Gilbert in New York. "Indeed, most state laws regulating the solicitation of charitable contributions were passed in the wake of substantial fraud and abuse in connection with purported charitable contributions."

The defendants are attorney Randall L. Leshin; Randall L. Leshin, P.A., d/b/a Express Consolidation; Express Consolidation Inc.; and Consumer Credit Consolidation Inc. and its president, Maureen A. Gaviola. The complaint was filed in U.S. District Court in Florida.

The defendants are accused of falsely claiming they are a nonprofit entity; that the only cost for their services is a monthly administrative fee that is less than $49 and/or that there is no application fee; that their services will result in estimated savings of a specified amount, typically several thousand dollars; and that their services will reduce the consumer's monthly payment or total debt.

The complaint alleges that the defendants also failed to disclose the program's total costs and told consumers that certain payments were refundable without disclosing all limitations of the refund policy.

Other allegations involve calling telephone numbers on the U.S. do-not-call registry, calling consumers who stated they did not wish to receive such calls from the defendants, failing to pay the fee to access the registry and "abandoning calls."

The defendants are accused of using computerized services for "voice broadcasting," the delivery of recorded messages to answering machines and voice mail services. The TSR requires that such calls answered by a person be connected to a live representative within two seconds. This restriction on abandoning calls by hanging up or playing a recording when someone answers applies to calls selling goods as well as calls for charitable contributions.

The complaint cited The Broadcast Team as one telemarketer used by the defendants. TBT was sued by the Justice Department in December 2005 at the FTC's request. TBT is accused of causing almost 11 million abandoned calls on the defendants' behalf.

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