According to the FTC, the organisation runs a group of companies
advertised as the National Consumer Council (NCC). This, according
to pre-recorded messages left by the NCC on consumers' answering
machines, is a non-profit organisation that will stop creditors'
collection efforts and significantly reduce consumers' debt.
But consumers responding to these solicitations are allegedly
encouraged to enrol in a debt negotiation programme. In reality,
the FTC contends, the programme is in many cases ineffective in
reducing debt and has inflicted severe harm on consumers. According
to papers filed with the court, the defendants' program worsened
the financial situation of many consumers so that they had little
choice but to file for bankruptcy.
In addition, says the FTC, NCC takes hundreds of dollars from
consumers' monthly payments as fees, which they do not always
disclose.
The FTC has therefore filed a complaint alleging that NCC has
violated the Federal Trade Commission Act, which bars deceptive
practices, and has harmed consumers throughout the US.
The FTC also charges that the group violated the Telemarketing
Sales Rule (TSR) by calling consumers who placed their phone
numbers on the National Do-Not-Call-Registry.
The National Do-Not-Call Registry, which is similar to the UK's
Telephone Preference Service, gives consumers the right to opt-out
of receiving telemarketing calls at home. It began operating in
October last year and currently contains nearly 60 million phone
numbers.
Under the Registry rules, telemarketers are required to clean
their lists every three months of those numbers that have
opted-out. Telemarketers that call a number on the list are liable
for a fine of up to $11,000 per call. Political and charitable
organisations are permitted to call consumers, but they must follow
consumer requests not to be called again.
According to the FTC, NCC was only 'masquerading' as a
non-profit organisation and did not benefit from the rules relating
to charitable status. On top of this, NCC violated the TSR by
continuing to call consumers who had previously stated that they
did not wish to receive calls from the defendants.
At the FTC's request, a US district court judge has issued a
temporary restraining order barring the group's activities.
