Web-based debt relief operation settles FTC charges

The company had no substantiation for its claims that customers could be debt free in a year or less

The owner of 17 websites purporting to offer debt relief to consumers has agreed to a settlement with the U.S. Federal Trade Commission that prohibits him from making deceptive claims.

Ryan Golembiewski, owner of United Debt Associates of Columbus, Ohio, will also pay more than US$390,000 to settle the FTC charges that the company published deceptive advertisements about debt reduction, the agency said in a press release. The settlement must be approved by a judge.

United Debt Associates functioned as a lead generator for debt settlement companies, the FTC said.

The company used websites such as Legitimatedebtsettlement.com, Debtreliefemergency.com, DebtDecreaser.com, Freedebtreductionhelp.com, and Disputedebts.com to collect contact information from customers, the FTC said. Customers calling a toll-free telephone number would often be routed to telemarketers for debt settlement providers, the FTC said

United Debt Associates earned nearly $25 per lead generated for debt settlement companies, the agency said.

The company's advertisements suggested customers could reduce their debt by 50 to 80 percent, according to a complaint the FTC filed in September in U.S. District Court for the Southern District of Ohio. Those claims were unsubstantiated, the agency said.

Golembiewski and his company "rarely, if ever, sought information" about whether the advertisements represented the services provided by the companies paying for the leads, the FTC said in the complaint.

The company also used fake customer testimonials and suggested that customers could be debt free in less than five years, the FTC said in the complaint. "If you play your cards right, your debt problems will vanish before the first year ends," one ad said.

United Debt Associates did not return a phone message seeking comment on the FTC settlement.

In addition to the judgment of more than $390,000, the settlement bans the defendants from engaging in or assisting others to engage in any debt relief service, and bars them from making any misrepresentations when marketing a financial product. The settlement requires the defendants to get substantiation for any benefit or performance claim for financial products.

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's e-mail address is grant_gross@idg.com.

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