Three companies and their owner, who allegedly falsely claimed they could help consumers quickly eliminate their credit card debts and stop calls from debt collectors, have been banned from the debt relief business under a settlement with the Federal Trade Commission.
The defendants are Jonathan Greenberg, Hermosa Group LLC, Media Innovations LLC and Financial Future Network LLC. The settlement order imposes an $8.5 million judgment that will be suspended when the defendants pay $500,000. The full judgment will be imposed immediately if they have misrepresented their financial condition.
The settlement order prohibits the defendants from making unsubstantiated claims about financial-related products or services, or misrepresenting material facts about any product or service. The order also prohibits them from disclosing or otherwise benefitting from customers’ personal information, and failing to dispose of this information properly.
According to the FTC’s complaint, the defendants, doing business as The Hermosa Group and Financial Future Network, advertised debt relief services, in English and Spanish radio and television ads, claiming that consumers could pay thousands less than what they owe on credit cards.
The defendants did not provide any debt relief services. Instead, the advertising was meant to generate sales leads – the names and phone numbers of consumers who called the defendants’ toll-free number – which the defendants sold to debt relief providers or other sales lead generators.
The FTC recently amended its Telemarketing Sales Rule to require debt relief companies to make certain disclosures and prohibit them from making false claims or collecting fees before delivering the services they promise. Because the defendants’ ads predated these amendments, the FTC did not allege any violations of the Rule in this case.
The Commission vote authorizing staff to file the complaint and approving the proposed stipulated final order was 5-0. The documents were filed in the U.S. District Court for the District of Maryland.