Florida Attorney General and Federal Trade Commission Shuts down a Pompano Beach Debt-Relief Fraud Scam
A civil complaint was filed earlier this summer in the Southern District of Florida against a Pompano Beach based debt-relief fraud scheme that resulted in about 15,000 consumers being duped out of approximately $70 million. The complaint seeks relief against several interrelated entities as well as officers of the entities.
The defendants include, 321Loans Inc., Financial Freedom National Inc., Helping America Group, Marine Career Institute Sea Frontiers Inc., Instahelp America Inc. and Breeze Financial Solutions. The complaint alleges that the companies operated as a “common enterprise” through an interrelated network with commingled funds, all allegedly controlled by the three officers of the entities.
Pursuant to the complaint, the defendants made their money by promising customers large debt consolidation loans at attractive rates, or by telling customers they were taking over the task of servicing consumers’ pre-existing debt relief accounts. In both instances, customers paid the defendants millions of dollars under the idea that these alleged debt-relief companies would pay off, settle or obtain dismissals of consumers’ debts and improve their credit ratings. Troubling about this operation is that the defendants kept most of the loan payments and paid nothing, or very little, toward reducing their customer’s debts. Customers became aware of this when the creditors began filing lawsuits due to non-payment. Customer’s credit scores suffered and some customers were forced into bankruptcy protection due to the large-scale fraud.
The defendants were very aggressive in its marketing activities towards potential customers. Below is a brief summary of how the scam was perpetrated:
Companies in the group used ads on their websites or sent personal letters to the potential client’s home addresses falsely indicating that they were a non-profit organization, and offering low-interest loans so a consumer could combine all debts and make one payment at a more favorable interest rate.
When consumers contacted a “customer approval center,” prospects were told that a loan would be made to cover the full amount of their debt, plus interest. The loan would be used to pay off all indebtedness, and the lucky consumer would only have to make monthly payments that were much less than what they were paying. The companies told consumers they could provide low-interest loans because their nonprofit status allowed them to borrow at favorable rates.
While potential clients were still on the phone, telemarketers emailed them a link to a document designed to look like a loan agreement. Consumers clicked on highlighted areas to initial and sign the agreement, which committed them to pay back the loan and fees, wherever applicable. The terms of the agreement were completely contrary to what was told to the consumers over the telephone.
Consumers agreed to have their bank accounts debited immediately for their first loan “repayment” or for a processing fee. Then monthly “repayments” were automatically taken from their accounts, ranging from $200 to over $1,000.
When consumers were told by original creditors that none of their bills had been paid, dismissed or settled, the defendant companies strung them along with false explanations, such as more time was needed to validate the consumers’ debts or to confirm payoff amounts.
Further, the entities used outside legal counsel to pursue affirmative claims against creditors. In pursuing these claims based upon alleged violations of the Florida Consumer Collection Practices Act (“FCCPA”) and Telephone Consumer Protection Practices Act (“TCPA”) clients received little to none of the amounts that were awarded for the violations. In one instance, an $80,000.00 settlement was received by the attorneys that paid the customer only $1,000.00 of the settlement.
At Sweeney Law, P.A. we have recently had a large influx of credit card matters from client’s that were taken advantage of and preyed upon in this scheme. There have been some consistencies in the matters that we are handling. The credit card matters that are in litigation have languished for months and months, and sometimes years. We have been able to successfully defend and reach negotiated resolutions thus far for these matters, however, what is most troubling is an effective advocate would of either settled these matters or had them tried within months of the lawsuit being filed. It is abundantly clear that the scheme relied upon monthly payments being made, the longer the case takes, the more monthly payments can be collected. Additionally, all of these clients were under the impression that the case was already settled or that the creditor dropped the action against them.
Sweeney Law, P.A. Regularly Represents Individuals With Debt Issues
Brendan A. Sweeney, Esq., of Sweeney Law, P.A., The Florida Debt Warrior, regularly represents individuals in defending and prosecuting claims against banks and other financial institutions. Brendan A. Sweeney, Esq., has been recognized as a Florida Legal Elite Rising Star Attorney in Consumer Law in 2014, 2015, 2016 and 2017, and is a member of the National Association of Consumer Advocates. If you are having debt issues then contact Sweeney Law, P.A. at 954.440.3993 immediately to protect your rights. www.sweeneylawpa.com