FTC Halts Advance Fee Recovery Scheme Targeting Victims of Timeshare Resale and Investment Scams

The defendants in a federal court action brought by the FTC have agreed to stop operating an advance fee recovery scheme for the duration of the on-going litigation. The FTC seeks to permanently stop the operation, which in the past year took close to $1.3 million from consumers, many of them elderly people who had lost money to timeshare resale and precious metal investment frauds.

According to the FTC’s complaint, telemarketers for Consumer Collection Advocates, Corp. and Michael Robert Ettus called consumers and falsely guaranteed that, for an up-front fee, typically 20 percent of the amount they lost, the defendants would recover substantial amounts of money for them – 60 percent or more – within 30 to 180 days. For consumers who had lost from several thousand to hundreds of thousands of dollars and could not afford a 20 percent up-front fee, the defendants would often accept a reduced fee of less than 10 percent of their loss. The defendants also charged a back-end fee of 20 percent for any amount recovered.

According to the complaint, consumers were sent a contract and power of attorney to sign and return with an up-front payment ranging from hundreds to as much as $10,000. Consumers who did not agree to buy the service received repeated calls from defendants pressuring them to sign up. Once consumers paid for the recovery service, they stopped hearing from the defendants. Those who called to ask about their recovery were told their case was being worked on, but few, if any, consumers received any money, according to the complaint.

The defendants are charged with violating the FTC Act and the FTC’s Telemarketing Sales Rule, which prohibits seeking or accepting payment from a person for recovery of money paid for previous telemarketing transactions until seven business days after that person receives the money.

Under a court order announced today, the defendants are prohibited from misrepresenting that consumers who buy their services will recover, or are highly likely to recover, a substantial portion of money they have lost to telemarketers, typically within 30 to 180 days. They are also barred from violating the TSR, and from selling or otherwise benefitting from customers’ personal information.

The Commission vote authorizing the staff to file the complaint was 5-0. It was filed in the U.S. District Court for the Southern District of Florida. On November 4, 2014, the court entered a temporary restraining order [link to TRO] halting the defendants’ deceptive scheme and freezing their assets. The defendants agreed to a preliminary injunction, which the court entered on November 17, 2014. The preliminary injunction continues the conduct prohibitions and asset freeze.

As part of a joint investigation between the FTC and the State of Florida, the Florida Attorney General’s Office filed an action against the defendants in state court on November 5, 2014, alleging the same deceptive practices.

The FTC appreciates the assistance of the Better Business Bureau Serving Southeast Florida and the Caribbean in bringing this case.

NOTE: The Commission authorizes the filing of a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.