FTC Providing Refunds to Debt Advocacy Center Consumers

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The Federal Trade Commission has started to mail out checks to people who were allegedly defrauded by The Debt Advocacy Center LLC by paying upfront fees for unsuccessful mortgage modifications. If you receive a restitution check from the FTC as part of this mortgage relief services action, you must cash it before Feb. 29, 2016.

These payments are from a settlement of an FTC lawsuit filed against the Debt Advocacy Center, its owners, and others in 2009. The FTC alleged that the Debt Advocacy Center “falsely claimed that they would obtain mortgage modifications that would make consumers’ monthly mortgage payments substantially more affordable.”

According to the fraudulent trade practice lawsuit, Debt Advocacy Center charged flat, upfront fees of $1,500 to negotiate mortgage modifications. Some consumers then paid an additional $1,500. The complaint alleged that the Debt Advocacy Center claimed a “90% success rate,” and guaranteed that they would pay the fees back to the consumer if they were unsuccessful.

However, according the FTC, in “numerous instances” the Debt Advocacy Center refused to return any payments for consumers they did not help. The defendants allegedly refused to provide any refunds even for consumer who had not signed a contract with them.

Also part of the FTC’s fraudulent trade practices lawsuit was Credit Services Alliance Inc., and several other individuals who sold “forensic loan audits” to people needing mortgage relief services. Those loan audits were advertised as mortgage relief aids, because accountants and attorneys could find flaws in the original loan documents that would provide leverage for the homeowner against the lender bank. The Federal Trade Commission alleged that those loan audits, which cost consumers $995 in advance, were “unlikely” to help consumers modify their loans or allow a short sale of their houses.

The FTC settled the Debt Advocacy Center lawsuit for $750,000 in 2012. The FTC suspended a judgment of over $2 million based on the defendants’ inability to pay the entire amount. The FTC apparently collected whatever it could from the defendants, including a $20,000 inheritance, and $37,000 installment payments secured by one defendant’s rights to a movie.

The Federal Trade Commission also banned the defendants from selling any mortgage relief services in the future, and stated that the defendants will need to have support for any claims they make about any financial products.

Apparently enough money has been collected from the settlements for the FTC to start issuing checks to victims of the Debt Advocacy Center. Information on the number or amount of those checks was not immediately available. Again, anyone who receives a check from the FTC from this lawsuit has until Feb. 26, 2016, to cash the check.

If you have any additional questions about the Debt Advocacy Center lawsuit or the payments from the FTC, the Federal Trade Commission hotline telephone number is 1-844-535-0116.

The mortgage relief scam lawsuit was prosecuted by Michael B. Rose, Michael Milgrom, and Maria Del Monaco from the Federal Trade Commission.

The Debt Advocacy Center Fraudulent Trade Practices Lawsuit is Federal Trade Commission v. The Debt Advocacy Center LLC, et al., Case No. 09-CV-2712, in the U.S. District Court for the Northern District of Ohio.