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Allegedly Failed to Deliver Guaranteed Lower Interest Rates

A group of telemarketers have agreed to settle Federal Trade Commission charges that their “debt elimination program” violated federal and state laws by falsely promising consumers substantially reduced interest rates and thousands of dollars in savings. Under the proposed settlement, two business owners are permanently barred from engaging in any debt negotiation or debt elimination business.

According to a complaint filed by the FTC and the Washington State Attorney General, the defendants made unsolicited phone calls to consumers nationwide and marketed the program on Internet Web sites, including and The complaint alleges that they falsely told consumers that a financial consultant with special relationships with the consumers’ creditors would negotiate substantially lower interest rates for them, resulting in reduced monthly payments and elimination of debt three to five times faster than otherwise would be possible. Consumers, who paid $399 to $629 for the program, allegedly were not told that the promised savings were based on projected savings that would result from simply paying more than the monthly minimum on their credit card debts over an extended period of time and not from reduced interest rates on the credit card debts. Because the defendants’ financial program almost always showed guaranteed savings of at least $2,500, even though it might take decades to achieve, few consumers received refunds.

The defendants allegedly violated Section 5(a) of the FTC Act by falsely claiming that purchasers would save thousands of dollars in a short time, have credit card and loan interest rates reduced substantially, pay off their debt much faster without higher monthly payments, and have reduced monthly credit card and loan payments. They allegedly violated the FTC’s Telemarketing Sales Rule and Washington state law by misrepresenting projected savings, failing to disclose the limits of their money-back guarantee, calling phone numbers listed on the National Do Not Call Registry, failing to pay the required annual fee for access to DNC-listed numbers, and calling people who asked them to stop calling.

The settlement permanently prohibits the defendants from engaging in the violations alleged in the complaint and imposes a judgment of $23,255,420, which will be suspended due to their inability to pay. The judgment will be imposed if they are found to have misrepresented their financial condition. The defendants are Debt Solutions Inc., DSI Financial Inc., DSI Direct Inc., and Pacific Consolidation Services Inc., and their two owners, Kenneth Schwartz and Jennifer Whalen, who are permanently barred from engaging in any debt negotiation or debtelimination business, and telemarketing sales managers David Schwartz and Greg Moses.

The Commission vote to authorize the staff to file the stipulated order was 5-0. The
order was filed in the U.S. District Court for the Western District of Washington at Seattle on
May 22, 2007.

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 complaint and order are available from the FTC’s Web site at and 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 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 more than 1,600 civil and criminal law enforcement agencies in the U.S. and abroad.

(FTC File No. 052-3002)

Contact Information

Frank Dorman,
Office of Public Affairs
Nadine Samter,
Northwest Region