"Talk about lead generation"

Recent actions by the Federal Trade Commission against three companies and their owners prove that ads promising quick and easy relief from credit card debt can attract the attention of law enforcement. But this case has an interesting twist, because what the company is really doing is generating leads and then reselling them to other companies.

According to the FTC’s lawsuit against Media Innovation, Hermosa Group, Financial Future Network and Jonathan Greenberg, the Rockville, Maryland, company promoted debt settlement services through radio and television ads that aired nationally in English and Spanish. The ads listed a series of dubious claims:

► Learn now how to eliminate debt quickly and easily.

► Let the professionals at Financial Future Network help and enjoy the freedom of a debt-free life.

► Soon! It’s easy!

► Simple, secure and proven.

► Reduce your debt legally. Lower monthly payments.

A television ad features a bar graph showing a consumer’s debt falling from “thousands” to “hundreds” and the words “You pay less!” or “Hermosa charges less!” on the screen. .

So, when people call the advertised toll-free numbers, do these companies offer debt settlement services or sign them up for a debt settlement plan? No. Instead, callers are immediately forwarded as “leads” to other companies, and defendants are paid $50 to $65 based on their name and phone number. About 80% of the leads generated by the ads were sold to an unrelated agency, which in turn referred the leads to other debt settlement companies or law firms.

According to the FTC’s complaint, the defendants did not provide debt settlement services and there was no evidence to support their claims that they or any other company could significantly reduce or eliminate customers’ debt or achieve those results quickly. The FTC also charged that the defendants had no evidence that the company that ultimately obtained the tip delivered the promised results.

The settlement resulted in a return of $500,000, a stay of judgment of $8.5 million, harsh injunction terms, and a lifetime ban on defendant Greenberg from participating in any debt relief services.

An important PS for those in the debt relief industry is: The Federal Trade Commission recently revised its Telemarketing Rules to require key disclosures to customers and make it illegal to charge fees before delivering promised debt relief services. Although action in this case predates the amendments, the new rules are now in full effect. To learn more, read The Rules of Selling Debt Relief Services and Telemarketing: A Business Guide and The Rules of Selling Debt Relief Services and Telemarketing: What People Are Asking or watch this video.