The Federal Trade Commission has filed contempt charges against a promoter of credit repair and debt relief services and three of his companies, alleging that they continued their deceptive marketing practices in violation of a federal court order.
The FTC charged that Sam Tarad Sky, Allrepco LLC, Credit Restoration Brokers LLC and Debt Negotiations Associates LLC violated a March 2010 court order that resolved charges that the defendants deceptively marketed credit repair and debt relief services, and illegally charged an up-front fee for credit repair services.
The order bars them from deceptively marketing any good or service and from violating the Credit Repair Organizations Act.
The FTC charged the defendants tried to take advantage of financially strapped consumers by falsely telling them that almost anyone can qualify for food stamps, and by encouraging them to mislead the government about their finances to qualify for the food stamp program.
Despite the court order, Sky and his companies used two websites to promote a food stamp application guide that falsely promised it would show how "almost everybody" or "virtually everyone" can "legally apply for food stamps" or "legally get [food stamps] for free," the FTC alleges.
The defendants sold the guide for either a one-time fee of $99 or as part of "Financial Solution Package" that cost consumers a monthly recurring fee of up to $139, the suit claims.
According to the FTC, under long-standing government restrictions, only low-income households can qualify for the federal food stamp program. In the guide, however, the defendants repeatedly tell consumers to provide the government with misleading information in order to inflate their chances of being deemed eligible — advising them, for example, to have high-income residents briefly move out of their household. The FTC said following this advice could leave consumers open to civil or criminal charges.
Also, the FTC charged that the defendants marketed the food stamp application guide throughout the country without telling consumers that the guide contained information about the application process in only one state — Florida.
The FTC also alleged the defendants charged up-front fees for credit repair services, failed to make required disclosures about their debt relief services, and failed to fully report Sky's business activities, all in violation of the court order.
The civil contempt action was filed April 12 in the U.S. District Court for the Middle District of Florida.
