FTC wins injunction, shutting down phony credit card debt consolidation operations

Court shuts down bogus credit counselors Three companies offering U.S. consumers assistance in consolidating their debt were effectively closed down Thursday by a federal court order enjoining them from practicing their deceptive telemarketing.

The Federal Trade Commission said that the FBI, IRS, and Secret Service were also interested in the three companies, and while a criminal complaint has not yet been filed against them, those three agencies are working together to find any evidence pointing to violations of criminal law.

The firms, according to the FTC, bilked already debt-saddled Americans out of up-front fees for ostensibly guaranteed debt reduction services and then doing nothing except for resisting attempts to gain a refund. The FTC said that "consumers who complained and demanded refunds allegedly were denied outright, got the run-around, or had a $199 ‘nonrefundable fee’ deducted from their refund."

Consumers looking for help in pulling themselves out of debt should be careful of offers that seem too good to be true, and be particularly cautious of anyone demanding money up front or promising reduced principals.