At the FTC’s request, a California federal court has put an end to the actions of a company calling itself “FTC Credit Solutions.” According to the FTC, FTC Credit Solutions used false affiliation with the actual FTC to market fraudulent credit repair services to Spanish-speaking consumers. In the complaint, the FTC alleges that FTC Credit Solutions deceived its customers by claiming to be affiliated with or licensed by the FTC. Additionally, the complaint alleges that FTC Credit Solutions falsely promised that it could remove negative information from consumers’ credit reports, and guarantee a credit score of 700 or above within a six month period.
The FTC’s complaint quoted a radio advertisement by defendant Guillermo Leyes, wherein he claimed:
Fourteen years working in banking tells you that I can help you. I was the first to come here on the radio, bringing you what is called credit restructuring. And what many ask, how are we going to remove a bankruptcy? This is impossible. How are you going to remove it? They have had to hold their tongues and say, well, we don’t know how he does it. And I am not going to tell them either. Because to do it I have not rested my brain, to do it I studied and to do it I have a license direct[ly] from the FTC, the Federal Trade Commission.
In addition to the claims made by Leyes, defendant Maria Bernal who said FTC Credit Solutions “works under the Federal Trade Commission, which is a law that was signed by the President in 2010”, answered subsequent calls to FTC Credit Solutions, made by FTC officials posing as consumers. She also falsely promised that the company could “delete” and “get [the investigator] a pardon” for $19,000 in debt.
In all, the FTC alleges that the company, along with employees Leyes, Bernal, Jimena Perez and Fermin Campos, violated the FTC Act and the Credit Repair Organizations Act (CROA). Specifically, defendants violated the FTC Act by misrepresenting that they were affiliated with the FTC, by falsely promising to remove negative information from consumers’ credit reports, and by making false promises about improving consumers’ credit scores. In addition, the FTC alleges that by charging consumers upfront for credit repair services and misrepresenting their services, the defendants violated the CROA. Under the terms of the temporary restraining order granted by the court, the company has temporarily ceased operations and the defendants’ assets are frozen. The California federal court has said that it intends to obtain depositions and hear arguments on whether to extend the preliminary injunction it issued against FTC Credit Solutions.
Consumer complaints about scammers claiming federal affiliations have been rising. In 2014, the number of such complaints was nearly 24 times larger than the number of such reports in 2013, according to the FTC. However, the vast majority of those complaints involved scam-artists impersonating IRS officials as part of identity theft schemes. The fact that such practices are creeping into other areas is concerning for the FTC. “Peddling lies under the name of the Federal Trade Commission to target consumers who are in difficult financial situations is appalling,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection. “This scam used the promise of a fresh start to hurt consumers when they most needed help, so we are pleased the court has taken a first step to ending it for good.”