Allegedly Made Illegal Robocalls, Debited Consumers' Bank Accounts Without Their Consent; FTC Hosts Summit on Stopping Illegal Robocalls on October 18
At the Federal Trade Commission’s request, a federal court halted a purported debt relief operation that allegedly contacted consumers through prerecorded telemarketing calls, falsely claimed it would reduce their unsecured debt by 50 percent or more, made unauthorized charges to their bank accounts, and called phone numbers listed on the National Do Not Call Registry. The action is part of the FTC’s efforts to stop scams that target consumers in financial distress and its continuing crackdown on illegal “robocalls.” The court ordered a stop to the defendants’ allegedly deceptive practices and froze their assets pending a trial.
The FTC has brought 88 enforcement actions against 250 corporate and 194 individual defendants involving robocalls and Do Not Call violations, resulting in payments of more than $69 million in civil penalties and equitable monetary relief.
“Giving people false hope by promising to reduce their debt is bad enough. But stealing their money by debiting their bank accounts without their permission is beyond the pale,” FTC Chairman Jon Leibowitz said. “Consumers can count on the FTC and state Attorneys General to find the bad actors and stop them from doing further harm.”
“We are happy to have assisted the FTC in bringing this case,” Ohio Attorney General Mike DeWine said. “The last thing people struggling with debt need is being harassed with false promises offering help to get out of debt.”
According to the FTC’s complaint against Jeremy R. Nelson and four companies he controlled, Nelson Gamble & Associates LLP, Jackson Hunter Morris & Knight LLC, BlackRock Professional Corporation, and Mekhia Capital LLC, the defendants marketed and sold debt relief services via telemarketing and websites. They promised to settle consumers’ debts for substantially less than they owed and said lawyers would provide the services. One website cited in the complaint stated, “Nelson Gamble works with the utmost diligence to obtain the best possible outcome for our clients, with over $90 million of debt settled in the past 12 months – and over $800 million since our inception . . . ,” noting that it employs “proven tactical methods to settle debt by 50% to 80% of your total outstanding balances. . . . Typically, you can be free from debt in three years or less.”
According to the complaint, the defendants were not lawyers, as they claimed; they settled few, if any, debts for customers; and some consumers who did not order their services found that the defendants had debited money from their bank accounts.
The FTC charged the defendants with violating the FTC Act and the agency’s Telemarketing Sales Rule (TSR) by making false and deceptive claims and by causing consumers’ bank accounts to be debited without their express, informed consent. They also allegedly violated the TSR by charging advance fees for debt relief services, calling phone numbers listed on the National Do Not Call Registry, calling consumers who had told them not to call, failing to transmit caller identification to consumers’ caller ID service, delivering prerecorded messages without consumers’ prior written consent, repeatedly calling consumers to annoy them, and delivering prerecorded messages that failed to identify the seller, the call’s purpose, and the product or service. In addition, the defendants allegedly violated the Electronic Fund Transfer Act and Regulation E by debiting consumers’ bank accounts on a recurring basis without their written authorization, and without providing consumers with a copy of the authorization.
The FTC appreciates the assistance of the Ohio Attorney General’s Office and the Better Business Bureau of the Southland in bringing this case.
The FTC also announced it will host a summit on October 18, 2012, in Washington, DC, to examine the issues surrounding the robocall problem. The summit will be open to the public, and will include members of law enforcement, the telemarketing and telecommunications industry, consumer groups, and other stakeholders. It will focus on exploring innovations that could potentially be used to trace robocalls, prevent wrongdoers from faking caller ID data, and stop illegal calls. More information about the summit and a draft agenda will be issued soon.
For information about dealing with debt, read the FTC’s Knee Deep In Debt.
The Commission vote authorizing the staff to file the complaint was 5-0. The complaint was filed in the U.S. District Court for the Central District of California.
NOTE: The Commission files 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 has actually violated the law. The case will be decided by the court.
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.
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