On November 30, 2022, the FTC temporarily shut down a credit card debt relief scheme operated by Sean Austin, John Steven Huffman, and John Preston Thompson and their affiliated companies that allegedly took millions from people by falsely promising to eliminate or substantially reduce their credit card debt. According to the FTC, the scheme often targeted older Americans and financially distressed consumers.
From FTC’s Bureau of Consumer Protection Director Samuel Levine statement:
“These defendants preyed on older Americans already struggling with credit card debt and caused them to fall into even worse debt, with lasting harm to their credit. We will continue going after companies that take advantage of people in financial distress.”
The FTC alleges that the defendants have operated a network of companies incorporated in Tennessee, Nevada, New Mexico, and Wyoming that have worked together as a common enterprise to support their deceptive credit card debt relief scheme. Some of their companies included ACRO Services, American Consumer Rights Organization, Consumer Protection Resources, Reliance Solutions, Thacker & Associates, and Tri Star Consumer Group.
In a complaint filed by the FTC against Austin, Huffman, and Thompson, the agency alleges that the defendants engaged in several deceptive and unlawful tactics, including:
Deceptive telemarketing. The scheme’s operators violated the Telemarketing Sales Rule by using telemarketers who often falsely claimed to be affiliated with a particular credit card association, bank, or credit reporting agency and promised they could greatly reduce or eliminate consumers’ credit card debt in approximately 12-18 months.
Making phony debt relief promises. The scheme’s operators claimed to use several bogus methods to reduce or eliminate consumers’ credit card debt such as telling consumers that they may qualify for a federal debt relief program.
Charging deceptive upfront fees. Consumers who agreed to sign up for the debt relief program were charged an upfront enrollment fee and were falsely told it is part of the debt that will be eliminated. They were also charged monthly fees ranging from $20-$35 for “credit monitoring” services.
In addition, the FTC alleges that consumers who signed up for the defendants’ services were told to stop making payments to their credit card companies and communicating with those companies. However, the consumers were never informed that they could be sued for failing to pay their credit card debt, may accrue even more debt, and could damage their credit scores.
The FTC’s press release can be found here.
The complaint can be found here.