Skip to main content

The Federal Trade Commission put a stop to a California-based auto loan modification operation that settled FTC charges after allegedly deceived consumers with false promises that it could get auto loans modified and stop cars from being repossessed.

Patrick Freeman, the sole owner of the Hope for Car Owners operation, has agreed to a settlement with the FTC that bans him from marketing auto loan modifications and any other debt relief services. Freeman’s company is in default.  In April 2012, the FTC alleged that Hope for Car Owners, LLC and Freeman charged hundreds of dollars in up-front fees, based on bogus promises that they could reduce consumers’ monthly car loan payments and help avoid repossession of their vehicles.

Recognizing that a car is second only to a home as the most expensive purchase many consumers make, the FTC has been highly involved in auto-related consumer issues. In this case, the agency alleged that the defendants’ websites and telemarketers promised consumers substantially lower monthly payments.  According to the FTC, the defendants collected hundreds of dollars in up-front fees and told the consumers to stop paying their auto lenders, which often left them in worse shape than when they began, and increased the risk that their vehicles would be repossessed.  The FTC also alleged that once the up-front fees were collected, the defendants did nothing to obtain the promised loan modifications, and consumers who tried to get refunds were denied. In one case, for instance, Hope for Car Owners took $400 from a consumer and told her not to make any more payments on her vehicle, according to the FTC.  The consumer followed the defendants’ instructions, and her lender soon informed her that her vehicle was going to be repossessed.

Under the settlement order, Freeman is prohibited from making misrepresentations about financial products and any other product or service.  He also is required to back up any claims about the benefits, performance, or efficacy of any product or service, and to destroy customer information obtained by the loan modification scheme within 30 days after the settlement order takes effect.

The settlement also imposes a $362,388 judgment, which will be suspended due to Freeman’s inability to pay.  If it is later determined that the financial information Freeman provided to the FTC was false, the full amount of the judgment will become due.

The FTC has a new video warning car owners  to avoid businesses that charge a fee in exchange for a promise to lower car monthly car payments, and in some cases, help stop repossession.  As the video points out, consumers who have trouble making their monthly car payments should contact their lenders directly.  Consumers also can read Ads for Auto Loan Modifications: You May Be Able to Drive a Better Deal with Your Lender.

The case is part of the FTC’s ongoing effort to protect consumers in financial distress. The FTC brought this case and a similar one, NAFSO VLM, Inc. and Kore Services LLC, at a time when the rate of auto repossession was high.  In 2011, the agency held a recent series of roundtable workshops to gather information on possible consumer protection issues that may arise during the sale, financing, or lease of motor vehicles.

The Commission vote approving the proposed consent decree was 3-1-1, with Commissioner J. Thomas Rosch voting no and Commissioner Maureen K. Ohlhausen not participating.  The FTC filed the proposed consent decree in the U.S. District Court for the Eastern District of California and it was entered by the court on November 30, 2012.

NOTE:  This consent decree is for settlement purposes only and does not constitute an admission by the defendant that the law has been violated.  Consent decrees have the force of law when approved and signed by the District Court judge.

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.

FTC File No. X120016

Contact Information


Betsy Lordan
Office of Public Affairs