Four defendants in an allegedly phony debt-relief services operation have settled Federal Trade Commission charges.

The scam claimed that, for $995, it would reduce consumers' credit card interest rates.

Under the settlement, the defendants will be banned from robocalling consumers and from selling debt relief services. The operation, based in Canada and New York, used telemarketing boiler rooms in Orlando, to defraud consumers. Although the defendants operated under several different names, they often used "AFL Financial Services," or variations of the name "AFL."

According to the complaint, F&F Payment Processing Inc., Bajada Management Group Inc., Baird B. Fisher, Jacqueline M. Fisher and others used illegal robocalls and falsely promised refunds to consumers if they did not save at least $2,500 as a result of lowered credit card interest rates.

The order also imposes a judgment of more than $13.1 million, which will be suspended upon payment of $159,000 by the defendants who are part of the settlement. Additional funds are expected from the court-appointed receiver's sale of the defendants' assets in the U.S.

The full judgment will become due immediately if the defendants are found to have misrepresented their financial condition or fail to meet the terms of the order. Four defendants named in the complaint are in default.

Based on records obtained by the FTC, the operation took in more than $13 million from more than 13,000 consumers. When the case was filed, the court halted the operation and froze the defendants' assets pending a trial.

The defendants claimed they would negotiate lower credit card interest rates. At most, the defendants sometimes telephoned credit card issuers and attempted to conduct three-way calls among the credit card company, the consumer, and one of the defendants' so-called financial representatives.

Often the defendants did not make these calls at all. When they did, the calls were unsuccessful. Some credit card issuers refused to participate in the calls as a matter of policy. Instead of a reduction in interest rates, consumers, who were already in dire financial straits, found themselves saddled with an additional $995 credit card charge.

In addition to banning the defendants from delivering prerecorded messages and selling debt-relief services, the proposed settlement order permanently prohibits the companies and their owners from:

  • making misrepresentations about any goods or services, including anyone's ability to obtain a loan modification or improve a consumer's credit rating;
  • misrepresenting the terms of any refund or cancellation policy, affiliation with any government or non-profit program, or that a consumer will receive legal representation;
  • violating the FTC's Telemarketing Sales Rule;
  • illegally calling numbers on the National Do Not Call Registry, or abandoning calls without involving a live operator; and
  • failing to transmit caller identification, and failing to disclose the seller's identity and the call's purpose.

In addition, the settlement prohibits the defendants from selling or otherwise benefitting from customers' personal information, from failing to properly dispose of customers' personal information within 30 days, and from failing to monitor sales personnel for compliance with the order.

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