National Consumer Council, of California, used its nonprofit status to exploit a loophole in telemarketing laws and place thousands of unsolicited sales calls to consumers, the FTC said.
The company promised free debt counseling, but it simply directed consumers to other companies that charged thousands of dollars in fees but rarely helped consumers reduce their bills, the FTC said.
The company is winding down its business and has returned approximately $24 million of the $84 million it took from consumers, the FTC said. Three company officers also have personally paid back a total of $3.9 million to consumers.
Debt Management Foundation Services, of Florida, also violated telemarketing laws to drum up business and charged consumers fees of up to $1,000, the FTC said. The company is in the process of being liquidated, and its owners must pay back a total of $250,000 and surrender their interest in the company.
The FTC last week announced a settlement that will require a Maryland debt-counseling firm, AmeriDebt Inc., to shut down entirely.
Debt-ridden consumers should avoid credit counselors that insist on high monthly fees and guarantee to get rid of debts, the FTC said. Further information is available at the commission's Web site at (
http://www.ftc.gov).
