Debt relief company returns money to FTC, refund checks in the mail
The Federal Trade Commission is mailing refund checks to thousands of people who paid up front for debt relief.
Regulators say a company called United Debt Counselors, LLC sent direct mail ads to as many as 100,000 consumers per week, and thousands responded.
The FTC says the mail looked like official documents from a bank or attorney.
It's a big heads up for anyone asked to pay up-front fees to reduce your debt and lower your payments.
Court records show the case was actually settled a year ago this week.
According to the FTC the company misrepresented it's success rate, exaggerated how much money you can save,
failed to fully explain how the program works, and charged illegal up-front fees.
If your credit card debt is out- pacing your ability to keep up with payments, reputable credit counseling advocates say debt relief companies should be your last resort.
"People jump right into the first solution that looks like it's best for them, even though it may do more harm than good," said Bruce McClary, spokesman for the National Foundation for Credit Counseling.
"But unfortunately, by the time the federal regulators step in with these enforcement actions, there are thousands of consumers who've already been harmed," he added.
Even if the government is able to get you a refund, most of the money is gone for good.
Settlement docements in the United Debt Counselors case show the total monetary judgement was $9,000,000.
But of that $9 million, $8,490,000 was suspended.
The defendants had to make $510,000 in installment payments to the FTC, which says the average consumer refund is $84.27.
In reaching the settlement with the FTC, United Debt Counselors did not admit wrongdoing.
The company is still in business but is banned from making misrepresentations and unsubstantiated claims.
Advice for consumers? If you're drowing in debt and need help- do your homework and find an approved and accredited, non-profit credit counseing service.
The National Foundation For Credit Counseling is an excellent place to start.
For other resources to help you avoid losing money to debt relief schemes, check tips on the Federal Trade Commission website, the Washington Attorney General website, the Washington State Department of Financial Institutions website and the Consumer Financial Protection Bureau website.