After $22M haul, debt-relief scammers shut down by FTC

A phony debt-relief company that bilked consumers in the United States and Canada out of an estimated $22 million has been banned from the business under a settlement with the Federal Trade Commission.

Mutual Consolidated Savings, which marketed a "Rapid Debt Reduction" program that promised to lower interest rates on credit cards for a hefty up-front fee, settled FTC charges it misled consumers. Under a court order settling the FTC charges, the defendants are permanently banned from marketing debt-relief services and will pay $1.5 million to compensate defrauded clients.

Filed as part of the agency's "Operation Short Charge," the FTC's complaint alleged MCS and its affiliates and principals used cold calls, pre-recorded "robocalls," and the Internet to push a phony "Rapid Debt Reduction" program in the United States and Canada.
MCS persuaded consumers to cough up $690 to $899, claiming they would reduce their credit card interest rates, save them thousands of dollars and allow them to pay off debt three to five times faster than they might otherwise. The FTC also accused the defendants of failing to honor their money-back guarantee.

In addition, said the FTC, MCS also:
  • Called consumers whose telephone numbers were on the Do Not Call Registry.
  • Failed to honor consumers' requests that they not be called again.
  • Transmitted fake Caller ID information.
  • Failed to identify themselves during telephone pitches.
  • Made illegal robocalls.
The court order bans the defendants for life from working in the debt-relief industry and prohibits them from misleading consumers or helping anyone else mislead consumers about any goods or services they are selling. In addition, the defendants must also comply with the agency's Telemarketing Sales Rule, including not calling consumers on the Do Not Call Registry.

The settlement order also requires the defendants to surrender all their available assets -- approximately $1.5 million - - which will be used to refund former customers in the United States and Canada. If it turns out the defendants lied about their finances, they'll be required to pay the full amount they defrauded from their customers, $22.5 million.

The FTC recently unveiled new rules designed to protect consumers from shady debt-relief services. Before considering any such service, make sure to consult this list of debt-relief do's and dont's.
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