Legal Library: Cases and Proceedings

At the request of the Federal Trade Commission, a federal court has temporarily halted a bogus credit repair scheme known as The Credit Game for promoting a series of lies and deceptions. The FTC alleged the scheme’s operators lied to credit reporting agencies regarding information on consumers’ credit reports and pitched consumers a supposed business opportunity that was essentially starting their own bogus credit repair scheme.

In a complaint filed against The Credit Game and its owners, Michael and Valerie Rando, the FTC alleged that the company has illegally charged consumers hundreds and even thousands of dollars for credit repair services of little to no value and told consumers to “invest” their COVID-19 governmental benefits on their unlawful services. In some cases, the company’s “services” included filing false identity theft reports with the FTC and encouraging consumers to take actions that were unlawful. The FTC asked the court to immediately halt the company’s illegal operations, appoint a receiver, and freeze the defendants’ assets. The court issued a temporary restraining order doing so on May 3, 2022.

As a result of a Federal Trade Commission lawsuit, the operators of “The Credit Game,” a credit repair scheme that cost consumers millions of dollars, face a lifetime ban from the credit repair industry in proposed court orders filed today.

Michael and Valerie Rando and their companies, first sued by the FTC in May 2022, would also be required to turn over a wide array of property that would be liquidated and used to provide refunds to consumers harmed by the scam.

The Federal Trade Commission and a group of 18 states sued national jewelry retailer Harris Jewelry to stop the company from cheating military families with illegal financing and sales practices. According to the complaint, the jewelry company deceptively claimed that financing jewelry purchases through Harris would raise servicemembers’ credit scores, misrepresented that its protection plans were not optional or were required, and added the plans to purchases without consumers’ consent. The complaint also includes a charge that the jewelry company violated the Military Lending Act, the FTC’s first action under this Act.

The Federal Trade Commission has stopped Mission Hills Federal, a student loan debt relief scheme, alleging it bilked more than $23 million from thousands of consumers with false claims that it would service and pay down their student loans. After the FTC filed a complaint seeking to end the deceptive practices, a federal court temporarily halted the scheme and froze its assets. The FTC filed an amended complaint on August 27, 2019, adding Labiba Velazquez as an alleged defendant. On July 20, 2020, the court granted final summary judgment.

To settle Federal Trade Commission charges that it engaged in deceptive and unfair practices, Dun & Bradstreet (D&B) has agreed to an order requiring substantial changes in the firm’s operations that will benefit small- and mid-sized businesses. Under the proposed order, D&B will also provide refunds to certain businesses that purchased the company’s products in the belief that using the products would improve their business credit scores and ratings.

At the request of the Federal Trade Commission and the Florida Attorney General's Office, a federal court temporarily halted an alleged sham credit card interest rate reduction operation that often targeted financially distressed consumers and older adults in July 2020. In February 2022, the FTC announced that the operators are permanently banned from the debt relief industry as part of court orders resolving charges by the FTC and Florida AG’s Office.

The Federal Trade Commission is returning more than $3.7 million to consumers who lost money because of unfair and deceptive loan servicing practices by online lender Avant, LLC.

The FTC sued Avant in April 2019, alleging that the company falsely advertised that it would accept payments by credit or debit cards, when in fact it did not. This often resulted in customers being charged additional interest on their loans as they tried to arrange a different form of payment. The FTC also alleged that the company withdrew money from customers’ bank accounts or charged their credit cards without authorization, failed to properly and timely credit payments made by check, provided deceptive payoff quotes to customers, and tried to collect more money than the quoted payoff amount.

The Federal Trade Commission is returning more than $10 million to consumers who were charged undisclosed fees by online lender LendingClub Corporation. The FTC is distributing refunds directly to more than 15,000 LendingClub customers and encouraging additional LendingClub customers to apply for refunds.

The FTC sued LendingClub in April 2018, charging that the company falsely promised loan applicants that they would receive a specific loan amount with “no hidden fees,” when in reality the company deducted hundreds or even thousands of dollars in hidden up-front fees from the loans. The FTC also alleged that LendingClub told consumers they were approved for loans when they were not and took money from consumers’ bank accounts without authorization.

The Federal Trade Commission is sending payments totaling more than $9.7 million to 61,990 consumers who were charged hidden fees by LendingClub Corporation.

These payments are the result of a claims process conducted by the FTC in February 2022. It is the second distribution of funds in this matter and brings the total amount refunded to consumers to more than $17.6 million.

The FTC filed a complaint against RCG Advances, LLC—formerly known as Richmond Capital Group, LLC, and also doing business as Viceroy Capital Funding and Ram Capital Funding—and a related entity and individuals. The complaint alleges that, since at least 2015, the defendants have deceived small businesses and other organizations by misrepresenting the terms of merchant cash advances they provided, and then used unfair collection practices, including threatening physical violence, to compel consumers to pay. The FTC also alleges that defendants have made unauthorized withdrawals from consumers’ accounts.

RCG Advances, LLC and Robert Giardina are permanently banned from the merchant cash advance industry for deceiving and threatening small businesses and their owners. In addition, the court ordered RCG Advances and Giardina to make an upfront payment of $1.5 million and subsequent payment of more than $1.2 million to refund consumers.

The Federal Trade Commission obtained an order permanently banning a payment processor that facilitated a fraudulent student loan debt relief scheme from processing debt relief payments. The order also requires the company and its owner to surrender $500,000 to the FTC for consumer redress.

The FTC’s complaint against Automatic Funds Transfer Services, Inc. (AFTS) and its owner, Eric Johnson, alleges that AFTS processed at least $31 million in consumer payments for a fraudulent student loan debt relief scheme sued by the FTC in 2019. The debt relief scheme used numerous names, including The Student Loan Group (SLG).

The Federal Trade Commission alleged that BlueHippo Funding, LLC, and BlueHippo Capital, LLC operated a deceptive computer financing scheme in violation of a federal court order. 

A group of auto dealerships in Arizona and New Mexico must cease business operations as part of a court-approved settlement resolving Federal Trade Commission charges that the dealerships deceived consumers and falsified information on vehicle financing applications.

In a case filed in 2018, the FTC alleged that Tate’s Auto Center of Winslow, Inc.; Tate’s Automotive, Inc.; Tate Ford-Lincoln-Mercury, Inc. (doing business as Tate’s Auto Center);  Tate’s Auto Center of Gallup, Inc.; and Richard Berry, an officer of the dealerships, falsified consumers’ income and down payment information on vehicle financing applications and misrepresented important financial terms in vehicle advertisements. The case continues against Berry and relief defendant Linda Tate.  

The Federal Trade Commission is sending payments totaling more than $415,000 to 3,508 consumers who financed a car or truck at a Tate’s Auto dealership after January 1, 2013, and later had the vehicle repossessed. Tate’s Auto, which operated dealerships in Arizona and New Mexico, allegedly deceived consumers about payment information and falsified information on consumers’ financing applications.

Smart home security and monitoring company Vivint Smart Homes Inc. has agreed to pay $20 million to settle Federal Trade Commission allegations that the Utah-based firm misused credit reports to help unqualified customers obtain financing for the company’s products and services.

Yellowstone Capital, a provider of merchant cash advances, will pay more than $9.8 million to settle Federal Trade Commission charges that it took money from businesses’ bank accounts without permission and deceived them about the amount of financing business owners would receive and other features of its financing products.

Merchant cash advances are a form of financing in which a company provides money to a small business up front in exchange for a larger amount repaid through daily automatic payments. In this case, the FTC alleged that Yellowstone and its owners continued withdrawing money from businesses’ bank accounts for days after their balance had been repaid. The complaint alleged that these unauthorized withdrawals left businesses without needed cash and that any refunds from the company could take weeks or months.

The Federal Trade Commission is sending 7,731 checks totaling more than $9.7 million to small businesses who were harmed by Yellowstone Capital, a merchant cash advance company that withdrew money from their bank accounts without permission.

A Rhode Island company and its owner will be permanently prohibited from misrepresenting they are affiliated with the U.S. Small Business Administration (SBA) as part of a settlement resolving Federal Trade Commission charges they misled consumers in the early days of the coronavirus pandemic. Ponte Investments, LLC, and its owner John C. Ponte were charged by the FTC in April 2020 with misleading small businesses to think they had an affiliation with the SBA and could offer companies access to the coronavirus relief programs administered by the agency.

The FTC entered into a settlement with the operators of LendEDU.com to resolve allegations that LendEDU falsely claimed that the website provided “objective,” “accurate,” and “unbiased” information about consumer financial products, such as student loans, personal loans, and credit cards, when in fact they offered higher rankings and ratings to companies that paid for placement.

New York City car dealer Bronx Honda and its general manager, Carlo Fittanto, will pay $1.5 million to settle Federal Trade Commission charges they discriminated against African-American and Hispanic car buyers and engaged in numerous other illegal business practices.

According to the FTC’s complaint, the defendants told sales people to charge higher financing markups and fees to African-American and Hispanic customers. The defendants told employees that these groups should be targeted due to their limited education, and not to attempt the same practices with non-Hispanic white consumers. According to the complaint, African-American and Hispanic customers paid more for financing than similarly situated non-Hispanic white consumers.