The U.S. Federal Trade Commission on Thursday announced the settlement of a nationwide case involving four companies that allegedly claimed they could reduce consumers' debt by up to 60 percent. The false claims led many people who signed up for the services into financial ruin and bankruptcy, according to the FTC.
The four debt negotiation companies were among seven companies and three people charged with violating the deceptive and unfair practices clause of the Federal Trade Commission Act. The case dates back to September 2006, when the first enforcment actions were taken against the companies.
"All of the defendants in the nationwide operation were charged with misrepresenting how much they could reduce consumers' debt, and not adequately disclosing the likelihood that consumers would be sued if they took the defendants' advice and stopped paying creditors," according to an FTC news release. "The FTC also charged the defendants with not disclosing that consumers' account balances would grow from interest, interest rate increases, late fees and other charges ..."
