Thousands of consumers have been deceived through telemarketing schemes designed to sell phony mortgage assistance and debt relief programs to already cash-strapped citizens. In 2012, the FTC filed complaints against several telemarketing companies alleging that they pitched programs that would supposedly help consumers in financial distress pay, reduce or restructure their mortgage and other debts. Among other things, the reported schemes violated the FTC Act, the Commission’s Telemarketing Sales Rule and the Mortgage Assistance Relief Services Rule (MARS Rule) which prohibits mortgage foreclosure rescue and loan modification services from collecting fees until homeowners have a written offer from their lender or servicer that they deem acceptable.
According to the FTC, the FTC’s complaints alleged that in addition to misrepresenting the likelihood that consumers would obtain a mortgage modification, the defendants falsely represented that consumers who did not receive a modification would receive full refunds, falsely represented that they were affiliated with the U.S. government, and falsely claimed to provide legal representation to consumers. Also, in violation of the MARS Rule, the telemarketers allegedly told consumers to stop communicating with their lenders, and failed to make Rule-mandated disclosures intended to ensure that consumers understand transactions with mortgage-assistance relief service providers and their rights under the Rule.
If you are experiencing financial difficulty, you may be tempted to use a debt relief company to help take care of your bills. Often times, settling with your creditors is a good alternative to filing bankruptcy. However, before you hire a company to help with your debts, you should first understand the differences in services that debt relief companies claim to offer, as well as the potential risks involved.