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FTC Charges Company With Financing Fraudulent Telecom Services Scheme
In the wake of the NorVergence Inc. telecommunications fraud case won by the Federal Trade Commission in 2005, the agency has charged a company with violating federal law by helping to finance the scheme and continuing to seek payment from defrauded consumers.
Based on an FTC complaint filed in 2004, a federal court voided 1,600 NorVergence contracts with small businesses and religious and other nonprofit organizations that were misled by promised savings on phone and Internet services. The contracts purported to be long-term rental agreements for a relatively inexpensive device that NorVergence falsely claimed would create the savings. NorVergence was forced into bankruptcy, and the promised services stopped. The judgment the FTC obtained against NorVergence left unaffected thousands of rental agreements NorVergence had already sold to finance companies.
