Debt Elimination Program Fails to Deliver Guaranteed Lower Interest Rates

Telemarketers Also Violate Do Not Call Rule

For Release

The Federal Trade Commission and the Washington State Attorney General have asked a federal judge to order Debt Solutions Inc. and three other telemarketers in Washington and Florida to stop charging consumers hundreds of dollars for a “debt elimination program” that offers a false promise of substantially reduced interest rates and thousands of dollars in savings. The agencies jointly filed the action in U. S. District Court in Seattle, seeking an injunction against them and refund of monies paid for violations of Section 5(a) of the FTC Act, the FTC’s Telemarketing Sales Rule (TSR), and Washington’s Consumer Protection Act.

“The defendants’ so-called ‘debt elimination program’ was not the answer for consumers who found themselves in financial hot water,” said Lydia Parnes, Director of the FTC’s Bureau of Consumer Protection. “There are a variety of legitimate options to reduce debt, including more realistic budgeting, credit counseling from reputable organizations, debt consolidation programs, and, if need be, filing for bankruptcy. In every case, though, people should be wary of any business that claims it can negotiate substantially lower interest rates on credit cards and loans.”

According to the FTC and the State of Washington’s complaint, since at least 2002, Debt Solutions Inc., DSI Financial Inc., DSI Direct Inc., Pacific Consolidation Services Inc., Kenneth Schwartz, Jennifer Ruth Whalen, David C. Schwartz, and Greg Moses have telemarketed and sold what they call a debt elimination program by making unsolicited phone calls to consumers nationwide, and by marketing the program on several Internet Web sites, including and The complaint alleges that the defendants falsely represented to consumers that they would be assigned a financial consultant whose special relationships with creditors will enable the consultant to negotiate substantially lower interest rates, saving consumers thousands of dollars, reducing their monthly payments, and paying off their debts three to five times faster–all without higher monthly payments. In fact,
according to the complaint, consumers who purchase the program typically do not have theirinterest rates lowered at all, and, if they do, the reductions are rarely more than one percentage point.

Consumers are promised a full refund if they do not save at least $2,500, but few consumers have received the guaranteed refund, according to the agencies’ complaint. Before buying the program for $399 to $629, the complaint alleges, consumers are not told that the promised savings may take decades to achieve, or that most of the savings will result from simply paying more money every month, not from reduced interest rates. The defendants also claim the program is endorsed by the Financial Standards Council in Canada and the Registered Financial Planners Institute of North America, but both claims are false, according to the complaint.

The FTC and the State of Washington’s complaint alleges that the defendants violated Section 5(a) of the FTC Act by falsely representing that purchasers will (1) save thousands of dollars in a short time; (2) have credit card and loan interest rates reduced substantially; (3) pay off their debt much faster without higher monthly payments; and (4) reduce their monthly credit card and loan payments. The complaint also alleges that they falsely represent that they have special relationships with credit card companies and lenders, and that their program is endorsed by the two organizations mentioned above. It also alleges that they misrepresented their money-back guarantee.

The complaint further alleges that the defendants violated the TSR and Washington state law by misrepresenting projected savings, failing to disclose the limits of their money-back guarantee, calling phone numbers listed on the Do Not Call Registry, failing to pay the required annual fee for access to DNC-listed numbers, and calling persons who had asked them to stop calling. The defendants also violated Washington state law by engaging in unfair or deceptive acts or practices and unfair methods of competition.

By a 5-0 vote, the Commission authorized the joint filing of the case with the State of Washington in U. S. District Court for the Western District of Washington at Seattle on March 6.

NOTE: The Commission authorizes the filing of a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant actually has violated the law. The case will be decided by the court.

Copies of the complaint 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 on 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 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 available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

The FTC’s Bureau of Consumer Protection is committed to ensuring compliance with the National Do Not Call Registry. To date, the Bureau has brought 25 enforcement actions for various DNC-related violations. Consumers can sign up their phone number on the Registry either online at or by calling toll-free 1-888-382-1222 (TTY 1-866-290-4236) from the number they wish to register.

(FTC File No. 052-3002)

Additional Contact Information

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Claudia Bourne Farrell,
Office of Public Affairs

Frank Dorman,
Office of Public Affairs

Staff Contact:
Charles Harwood and David M. Horn
Northwest Region