Operator Of Bogus Debt-Relief Scheme Must Return $7.9M To Harmed Consumers

The operator of a bogus debt relief scheme that federal regulates say only left consumers deeper in debt must provide some actual assistance to those affected by the program in the form of a $7.9 million judgment imposed by the Federal Trade Commission. 

The FTC announced today that it has closed a portion of its May 2014 complaint against DebtPro 123 and its operators by ordering ringleader Bryan Taylor to provide $7.9 million in relief to consumers affected by the operation, which promised to provide legal advice, settle debts, and repair credit, but mostly just left them in even worse financial shape than when they started.

Under the FTC’s stipulated order [PDF], the remaining leaders of DebtPro 123 – including Ryan Foland, Stacey Frion, and Kara Wilbur Taylor – were also ordered to pay $7.9 million. However, that judgment was suspended because of their inability to pay.

The FTC says the judgment to be paid by Bryan Taylor – who admitted to the agency’s allegations – will be deposited in a fund to be used for consumer redress.

According to the original complaint [PDF] against DebtPro 123 and its leaders, the scheme worked by requiring customers who signed on to the program give operators access to directly debit their bank accounts. The company would then take out a fee of up to 20% of a customer’s total debt owed.

“Defendants collected their fees as a portion of the monthly payments, front-loading the fees,” read the complaint. “For many consumers, more than half of their monthly payment went towards Defendants’ fees. For consumers who were in the program longer than eighteen months, Defendants also charged a $49 monthly ‘maintenance fee.’”

Additionally, the FTC alleged that the defendants told consumers to stop paying and communicating with their creditors. However, the company often didn’t start any sort of negotiation with creditors until after the customer had received letters from creditors warning of an impending lawsuit for failure to make payments on their debts.

When the defendants did do negotiating, the FTC claimed they “rarely, if ever, negotiated settlements with all of a consumer’s creditors.”

Despite paying substantial fees to DebtPro 123, the FTC said consumers’ debts often increased, “causing them to lose their homes, have their wages garnished, lose their retirement savings, or file for bankruptcy.”

Consumers who attempted to obtain refunds from the company were met with multiple obstacles – such as complicated forms and notarization requirements – that often prevented or delayed such requests.

In addition to paying the $7.9 million judgment Bryan Taylor, along with the other defendants, are banned from selling debt relief products or services, prohibited from making unsubstantiated claims for any product or service, and making material misrepresentations, either directly or through others, about any product or service.

Additionally, the FTC order bars the operators from telemarketing without keeping certain records and making certain disclosures; profiting from customers’ personal information; and failing to properly dispose of customer information.

The FTC said on Monday that it will continue to see default judgments against six corporate defendants: DebtPro 123 LLC, Allstar Processing Corp., Allstar Debt Relief LLC, Allstar Debt Relief LLC, Redwave Management Group Inc., and BET Companies Inc.

Debt Relief Scammer Settles FTC Charges by Agreeing to $7.9 Million Judgment [Federal Trade Commission]

by Ashlee Kieler via Consumerist