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The Federal Trade Commission put a stop to the allegedly deceptive practices of a debt settlement operation that lured consumers with exaggerated claims about how it could help reduce their debts.   The defendants behind the operation have agreed to a settlement that prohibits them from making any further misleading claims.

The FTC case against FDN Solutions, LLC and Timothy Daniels is part of the agency’s continuing crackdown on scams that target consumers in financial distress. The defendants claimed, mostly through Google ads and websites they used, such as verestdebtsolutions.com, 1800debtsettlement.com, and everestdebtrelief.com, that they could reduce consumers’ debts, typically by 40 percent to 60 percent, according to the FTC complaint. However, the FTC charged that these savings claims were misleading, because they did not take into account the consumers who dropped out of the program, or the fact that the fees each client paid totaled 30 percent of the savings achieved. 

The settlement order imposes a judgment of $3.3 million. Upon their payment of $85,000, the remainder of the judgment is suspended based on the defendants’ inability to pay.  If it is later determined that the financial information the defendants provided the FTC was false, the full amount of the judgment will become due.

Operating from offices in Tustin, California and Tampa, Florida, Daniels and FDN Solutions used paid search results on Google’s search engine and Google ads on third-party websites to advertise their services, telling consumers, “Reduce Debt 70% Want Proof?” and “Save up to 70% On Credit Card Debt,” according to the complaint.  A bar chart on one of the defendants’ websites showed that a consumer with a $40,000 debt would pay only $22,000 by using the defendants’ services.

The FTC alleged that Daniels and his company, also doing business as Everest Debt Solutions, 1800debtsettlement.com, and everestdebtrelief.com, violated the Federal Trade Commission Act by making unsupported savings claims and by using a fake consumer testimonial.  One supposed testimonial attributed to “Alicia S., Lake Charles, LA” said, “Everest Debt Solutions was able to drop my credit card debt down 62%!  They are truly a Godsend!  God Bless.”

The defendants’ websites provided consumers with toll-free numbers they could call for more information.  When they called, the defendants violated the Telemarketing Sales Rule by misrepresenting the amount of money or the percentage of the debt amount that a consumer could save by using their services, according to the complaint.

Consumers looking for help with credit card debt should be wary of anyone who tells them to stop paying their bills, to pay someone other than their creditors, or to stop talking to their creditors.  Consumers also should be careful about paying for financial assistance before they receive it.  For more information on dealing with debt, including public service announcements about avoiding debt relief scams, see the Debt Relief Services  page of the FTC’s Money Matters website for consumers.

The FTC’s Telemarketing Sales Rule prohibits companies that sell debt relief services over the telephone from charging fees before they settle or reduce a customer’s credit card or other unsecured debt.  This ban on advance fees protects all consumers who have enrolled in a debt relief service since October 27, 2010.  For more information about the advance fee ban see:  Debt Relief Companies Prohibited From Collecting Advance Fees Under FTC Rule.  For guidance to businesses on how to comply with the new Rule, see Debt Relief Services & the Telemarketing Sales Rule: A Guide for Business.

The Commission vote to file the complaint and proposed settlement against defendants FDN Solutions, LLC, and Timothy Daniels was 5-0.   The FTC filed the complaint and proposed settlement in the U.S. District Court for the Central District of California, and it was entered by the court on May 25, 2012.   

NOTE:  The Commission files a complaint when it has “reason to believe” that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest.  The complaint is not a finding or ruling that the defendant has actually violated the law.  A consent decree is for settlement purposes only and does not constitute an admission by the defendant that the law has been violated.  Consent decrees have the force of law when approved and signed by the District Court judge.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics.  Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.

(FTC File No. 1123078)
(FDN Solutions, LLC)