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.