This 'Relief' Service from Payday Loans Left Consumers in Deeper Debt, FTC Says

debt-relief778Payday loans can trap consumers in a cycle of debt, drawing fees that can equal triple-digit interest rates. But a “debt relief” operation that promised to help customers out of payday loan indebtedness turned out to put borrowers into a deeper financial hole, the Federal Trade Commission said Tuesday.
The FTC has filed a complaint in federal district court to stop the operations of Payday Support Center, LLC, now known as PSC Administrative, LLC, and related parties
The debt-relief operators provided little or none of the financial relief they promised. As a result, many consumers stopped making payments to the original lenders after having paid hundreds of dollars in fees. Consumers were required to make bi-weekly payments, typically between $98 and $160.
“The defendants promised to help people struggling to make payments on their payday loans,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “Instead, they took the money and ran, leaving their customers deeper in debt.”

The FTC said that Payday Support Center and related entities started promoting their services in August 2012, using the Internet, radio, and telemarketing to target consumers who owe multiple debts on payday loans, which are typically short-term loans with high interest rates.
The FTC alleges that the debt-relief service induced consumers into enrolling in their “financial hardship program” by claiming that they would negotiate with the lenders to reduce consumers’ payments and eliminate their debt. They advised these borrowers to stop making direct payments to their lenders, and to pay money to the debt-relief company instead. They were promised that loans would be paid off within four to six months.
Operators allegedly also told consumers that they would negotiate “interest free” payment on the loans through the program, falsely implying that the debts would be paid off, free of all interest and fees.
The FTC has charged the the debt-relief operators with violating the FTC Act, which prohibits deceptive acts and practices, and the agency’s Telemarketing Sales Rule, which prohibits abusive and deceptive telemarketing practices.
The complaint names as defendants: 1) PSC Administrative, LLC, formerly known as Payday Support Center, LLC; 2) Coastal Acquisitions, LLC, doing business as Infinity Client Solutions; 3) Jared Irby, individually and as an officer of PSC Administrative, LLC; and 4) Richard Hughes, individually and as an officer of PSC Administrative, LLC.
In its complaint, the FTC is seeking to permanently stop the defendants’ allegedly illegal conduct, and secure a monetary judgment to get refunds to consumers defrauded by the operation.

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