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The last “Debt-Set” defendant has agreed to settle Federal Trade Commission charges for his role in an operation that allegedly violated federal law by falsely claiming that it could reduce consumers’ credit card interest rates or the amount of their credit card debt. Terms of the settlement, in which the defendant has not admitted liability, are defined in the stipulated order entered by the United States District Court for the District of Colorado on April 11, 2008.

According to a complaint filed by the FTC in March 2007, Debt-Set, Resolve Credit
Counseling, Inc., and their principals sold debt reduction services through Web sites and television and radio advertisements with claims such as “Reduce Debt Now” and “Eliminate Harassing Calls.” When consumers called a toll-free number, the complaint alleged, they were encouraged to enroll in a “debt consolidation program” if their unsecured consumer debt was up to one month overdue, or a “debt settlement program” if overdue longer.

The FTC alleged that the defendants violated the FTC Act by falsely promising to obtain lump-sum settlements, such as “fifty cents on the dollar” or “50 to 60 percent” of consumers’ total unsecured debt, or to negotiate with creditors for lower interest rates. The complaint also alleged that they misrepresented that they would not charge consumers any up-front fees before obtaining the promised debt relief, and that participation in their program would stop creditors from calling or suing them to collect debt.

Under the settlement, Isaac Khan is barred from engaging in the violations alleged in the complaint, and, when making representations about specific debt reductions that can be achieved, he is required to disclose truthfully key terms of the program, including all fees and costs, when and how such fees and costs will be paid by consumers, the approximate time period before settlements will be achieved, and the fact that consumers’ balances typically will increase before settlements for all accounts are achieved. The settlement also contains standard compliance and reporting provisions that enable the FTC to monitor future compliance with the order. If Khan is found by the court to have misrepresented the sworn financial statements provided to the Commission, a $1 million judgment will be imposed.

The Commission vote to authorize staff to file the proposed stipulated final order was 5-0. The document was filed in the U.S. District Court for the District of Colorado.

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

Copies of the 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.

Contact Information

Frank Dorman,
Office of Public Affairs
The Division of Financial Practices