The defendants in a federal court action brought by the Federal Trade Commission agreed Thursday to stop running an advance fee recovery scheme for the duration of the ongoing litigation.

Telemarketers for Consumer Collection Advocates Corp. and Michael Robert Ettus, according to the FTC's complaint, called consumers and falsely guaranteed that, for an upfront fee, typically 20% of the amount they lost, the defendants would recover substantial amounts of money for them – 60% or more – within 30 to 180 days.

For consumers who had lost from several thousand to hundreds of thousands of dollars and could not afford a 20% advance fee, the defendants often would accept a reduced fee of less than 10% of their loss. The defendants also charged a back-end fee of 20% for any amount recovered.

The FTC wants to permanently stop the operation, which in the past year allegedly took in nearly $1.3 million from consumers, many of them elderly people who had lost money to timeshare resale and precious metal investment frauds.

Consumers, according to the FTC, were sent a contract and power of attorney to sign and return with an upfront payment ranging from hundreds to as much as $10,000. Consumers who did not agree to buy the service received repeated calls from defendants pressuring them to sign up. Once consumers paid for the recovery service, they stopped hearing from the defendants. Those who called to ask about their recovery were told their case was being worked on, but few, if any, consumers received any money.

The defendants are charged with violating the FTC Act and the FTC’s Telemarketing Sales Rule, which prohibits seeking or accepting payment from a person for recovery of money paid for previous telemarketing transactions until seven business days after that person receives the money.

Under a court order announced today, the defendants are prohibited from misrepresenting that consumers who buy their services will recover, or are highly likely to recover, a substantial portion of money they have lost to telemarketers, typically within 30 to 180 days. They also are barred from violating the Telemarketing Sales Rule, and from selling or otherwise benefitting from customers' personal information.

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