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AmeriDebt, Inc. will shut down its debt management operation as part of a settlement of Federal Trade Commission charges that it deceived consumers into paying at least $170 million in hidden fees. The FTC charged that the company misrepresented that it was a nonprofit credit counseling organization that would teach consumers how to manage their finances for no up-front fee. The settlement requires AmeriDebt to transfer all current clients’ accounts to a third party and bars the company from participating in any aspect of the credit counseling business in the future. The settlement does not include the other defendants – the FTC’s case against Andris Pukke, DebtWorks, and the relief defendant, Mrs. Pukke, will continue.

In a complaint filed in November 2003, the FTC charged that AmeriDebt, Inc., DebtWorks, Inc., and Andris Pukke deceived consumers with claims that AmeriDebt was a nonprofit organization that could help consumers get out of debt without an up-front fee. The FTC charged that, rather than operating for charitable purposes as advertised, AmeriDebt was funneling profits to affiliated for-profit entities, including DebtWorks and Andris Pukke. According to the FTC, AmeriDebt deceived new clients into making a “voluntary contribution” to enroll in the program. The FTC alleged that AmeriDebt kept these initial “contributions” as fees without consumers’ knowledge, rather than disbursing the money to consumers’ creditors as promised.

The FTC’s complaint also charged that, despite promises to teach them how to manage their money to avoid future debt, the defendants simply enrolled all customers in debt management plans (DMPs). In the DMP, consumers made a single monthly payment to AmeriDebt for all their unsecured debts; the payment was then to be disbursed to the consumers’ creditors. The FTC charged AmeriDebt with deceptive practices and also with violating the Gramm-Leach-Bliley (GLB) Act by failing to provide consumers with required privacy notices. In addition, the complaint named Andris Pukke’s wife, Pamela Pukke, as a relief defendant.

In June 2004, AmeriDebt filed for bankruptcy protection in the U.S. Bankruptcy Court for the District of Maryland. At the request of the FTC and others, the bankruptcy court removed existing management and appointed a Trustee to oversee AmeriDebt.

The stipulated final order bars AmeriDebt from participating in the credit counseling, debt management, or credit education business. As part of the settlement and the bankruptcy case, the company will shut down its operations by transferring all existing DMPs to a third party. The Trustee, Mark Taylor, Esq. of the law firm of Arent Fox PLLC, has already taken steps to transfer AmeriDebt’s existing DMPs to a reputable credit counseling agency consistent with the terms of the order.

In addition, the stipulated final order prohibits AmeriDebt from misrepresenting that it is a nonprofit organization; that it does not charge up-front fees for its services; and that it will counsel consumers about their finances. The company also is prohibited from violating the GLB Act in the future. The order requires the company to file a plan of liquidation with the bankruptcy court. In addition, the order contains a judgment of $170 million, but the FTC will collect on this amount, if at all, through the AmeriDebt bankruptcy case. Finally, the order contains standard recordkeeping requirements to assist the FTC in monitoring the defendant’s compliance.

For updates to the case, the FTC consumer hotline number for AmeriDebt is:

The Commission vote authorizing staff to file the stipulated final judgment and order was 5-0. The order was filed in the U.S. District Court for the District of Maryland on March 18, 2005.

Note: This stipulated final order is for settlement purposes only and does not constitute an admission by the defendant of a law violation. A stipulated final order requires approval by the court and has the force of law when signed by the judge.

Copies of the stipulated final order are available from the FTC’s Web site at and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint in English or Spanish (bilingual counselors are available to take complaints), or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

(FTC File No. X040009)
(Civ. No. PJM 03-3317)

Contact Information

Media Contact:
Jen Schwartzman
Office of Public Affairs
Staff Contact:
Peggy Twohig
Bureau of Consumer Protection