A California-based auto loan modification business has settled Federal Trade Commission charges that it falsely promised consumers it could get their auto loans modified and stop their cars from being repossessed.
Patrick Freeman, the sole owner of the Hope for Car Owners operation, is banned from marketing auto loan modifications and any other debt relief services. His company is in default.
The FTC in April 2012 alleged that Hope for Car Owners LLC and Freeman charged hundred of dollars in upfront fees based on bogus promises that they could reduce consumers’ monthly car loan payments and help avoid repossession of their vehicles.
The FTC alleged that the defendants’ Web sites and telemarketers promised consumers substantially lower monthly payments. The defendants allegedly told the consumers to stop paying their auto lenders, which often left them in worse shape than when they began, and increased the risk that their vehicles would be repossessed.
The FTC also alleged that once the upfront fees were collected, the defendants did nothing to obtain the promised loan modifications, and consumers who tried to get refunds were denied. In one case, Hope for Car Owners took $400 from a consumer and told her not to make any more payments on her vehicle, according to the FTC. The consumer followed the defendants’ instructions, and her lender soon informed her that her vehicle was going to be repossessed.
Under the settlement, Freeman is prohibited from making misrepresentations about financial products and any other product or service. He also is required to back up any claims about the benefits, performance, or efficacy of any product or service, and to destroy customer information obtained by the loan modification scheme within 30 days after the settlement order takes effect.
The settlement also imposes a $362,388 judgment, which will be suspended due to Freeman’s inability to pay. If it is later determined that the financial information Freeman provided to the FTC was false, the full amount of the judgment will become due.
