Prospective clients: Be very careful who you hire to help you with your debt problems. Many "debt settlement" companies are not operating legally, and can "fleece" or "scam" you. One enforcement action by the Federal Trade Commission against a debt settlement company contained in a FTC Bulletin reprinted below:

'Debt Meltdown Program' Marketers Settle with FTC; Charged with Failing to Deliver Promised Debt Reduction Services

Four companies and their principals, Robert and Miriam Lovinger, have agreed to settle Federal Trade Commission charges that they deceptively marketed a 'debt settlement' program that failed to provide services they claimed would reduce consumers' debt.

In October 2007, the FTC charged Edge Solutions, Inc. of Delaware, Edge Solutions, Inc. of New York, and Money Cares, Inc., all a/k/a The Debt Settlement Company and a/k/a The Debt Elimination Center; Pay Help, Inc.; and the Lovingers with violating the FTC Act. According to the FTC's complaint, the defendants sold their services through the Web sites idebthelp.com, moneycares.com, edgesolutions.com, and ontrackmpower.com, offering a 'Debt Meltdown Program' described as 'an aggressive method of helping consumers out of the debt trap and away from the bankruptcy path.'

The proposed settlement prohibits the defendants from:

• Misrepresenting that users of their services will be able to pay off, for a substantially reduced amount, all debts referred to the defendants' program; that the defendants will contact all creditors referred into the program to negotiate settlements and will begin paying them within several weeks after consumers join the program; and that they will provide personalized one-on-one financial consulting;
• Misrepresenting any fact material to a consumer's decision to purchase any debt negotiation or debt settlement service or program; and
• Failing to disclose the following terms, clearly, prominently, and contemporaneously, whenever any defendant represents (1) that consumers will obtain any specific percentage, range of percentages, or words to the equivalent effect, of a specific percentage of how much the consumer's debt will be reduced; or (2) that they will begin negotiating with and/or start paying creditors, within a specific time period: all fees and costs, including when and how consumers will pay them; the approximate time period before settlements will be achieved, based on the experience of the average consumer who enrolls in the defendants' service or program; and that consumers' balances will typically increase during this time period until settlements for all accounts are achieved.

 The proposed order imposes a $7 million suspended judgment that may be imposed in full if the defendants are found to have misrepresented their financial condition. The order also requires the defendants to release their claims to assets frozen by the court in 2007 and requires the Lovingers to transfer the proceeds from the sale of their Florida property to be used for possible restitution to injured consumers. Also under the order, the Lovingers may not offer a debt negotiation or debt settlement service or program to consumers in the future without first obtaining a $1 million performance bond. In addition, the defendants cannot sell, rent, or otherwise disclose personal information about anyone who paid them money before the order was entered. The settlement also contains record-keeping provisions to allow the FTC to monitor compliance with the order.

The Commission vote to authorize staff to file the proposed stipulated final order was
4-0. The order was filed in the U.S. District Court for the Eastern District of New York on August 1, 2008.

NOTE: This stipulated final order is for settlement purposes only and does not constitute an admission by the defendant of a law violation. A stipulated final order requires approval by the court and has the force of law when signed by the judge.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC's online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,500 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC's Web site provides free information on a variety of consumer topics.