For Release
FTC Halts Debt Relief Scheme that Bilked Millions from Consumers While Leaving Many Deeper in Debt
Scheme run by Sean Austin, John Steven Huffman, and John Preston Thompson often targeted older Americans and financially distressed consumers
November 30, 2022
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- Consumer Protection
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- Southeast Region
- Debt Relief
- deceptive/misleading conduct
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The FTC has temporarily shut down a credit card debt relief scheme operated by Sean Austin, John Steven Huffman, and John Preston Thompson and their affiliated companiesthat allegedly took millions from people by falsely promising to eliminate or substantially reduce their credit card debt.
“These defendants preyed on older Americans already struggling with credit card debt and caused them to fall into even worse debt, with lasting harm to their credit,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “We will continue going after companies that take advantage of people in financial distress.”
Since 2019, Austin, Huffman, and Thompson have operated a network of companies incorporated in Tennessee, Nevada, New Mexico, and Wyoming that have worked together as a common enterprise to support the defendants’ deceptive credit card debt relief scheme, the FTC alleged. Their companies have operated under multiple names such as ACRO Services, American Consumer Rights Organization, Consumer Protection Resources, Reliance Solutions, Thacker & Associates, and Tri Star Consumer Group.
In a complaint,the FTC alleged that Austin, Huffman, and Thompson engaged in several deceptive and unlawful tactics, including:
- Deceptive telemarketing: The operators have violated the Telemarketing Sales Rule by using telemarketers to call consumers and pitch their deceptive scheme. The telemarketers often falsely claimed to be affiliated with a particular credit card association, bank, or credit reporting agency and promised they could greatly reduce or eliminate consumers’ credit card debt in approximately 12-18 months.
- Making phony debt relief promises: In marketing their services, the scheme’s operators claimed to use several bogus methods to reduce or eliminate consumers’ credit card debt. For example, they falsely claimed that consumers may qualify for a federal debt relief program or that a consumer doesn’t owe the debt because it hasn’t been “validated.”
- Charging deceptive upfront fees: Consumers who agreed to sign up for the debt relief program were charged an upfront enrollment fee of thousands of dollars depending on a consumer’s available credit, and they were falsely told it is part of the debt that will be eliminated as part of the program. Consumers were also charged monthly fees ranging from $20-$35 for “credit monitoring” services.
Consumers who signed up for the defendants’ services were told to stop making payments to their credit card companies and communicating with those companies. Consumers, however, were never informed that as a result of such actions, they could be sued for failing to pay their credit card debt, may accrue even more debt, and could damage their credit scores, which could also harm their ability to get credit in the future, the FTC alleged.
A federal court granted the FTC’s request to temporarily shut down the scheme operated by Austin, Huffman, and Thompson and froze their assets.
The Commission voted 4-0to authorize the staff to file the complaint. The complaint was filed in the U.S. District Court for the Middle District of Tennessee.
NOTE: The Commission files a complaint when it has “reason to believe” that the named defendants are violating or are about to violate the law and it appears to the Commission that a proceeding is in the public interest. The case will be decided by the court.
The Federal Trade Commission works to promote competition and protect and educate consumers. Learn more about consumer topics at consumer.ftc.gov, or report fraud, scams, and bad business practices at ReportFraud.ftc.gov. Follow the FTC on social media, read consumer alerts and the business blog, and sign up to get the latest FTC news and alerts.
Contact Information
Contact for Consumers
Consumer Response Center
Media Contact
Office of Public Affairs
Staff Contacts
Margaret Burgess
FTC Southeast Region
Alan Bakowski
FTC Southeast Region
Natalya Rice
FTC Southeast Region
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Consumer Alert
Credit card debt relief that wasn’t
By
Ari Lazarus
Consumer Education Specialist
November 30, 2022
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Credit card debt can be stressful. Interest rates can be high, and if you miss or can’t make your full payments, that growing balance can be overwhelming. Enter a group of companies that promised to reduce or eliminate your credit card debt. (For a fee.) But did they?
The FTC’s lawsuit against ACRO Services and related companies says no. Instead, the FTC says they operated a deceptive credit card debt relief scheme: claiming they could, for example, clear up your credit card debt. The price? You’d have to sign up for their program, pay an enrollment fee (usually in the thousands) — plus monthly fees for “credit monitoring” services.
So what could you expect from the program? Not much, says the FTC. Once enrolled, it was often hard to reach anyone. If you did, you might get a form letter to dispute your debts — even when the company knew those debts were legit. Even worse, says the FTC, these companies would tell you to stop making payments and stop communicating with your credit card companies. If you followed these instructions, you’d see increased fees, added interest, lower credit scores, and, sometimes, lawsuits from creditors.
If you’re looking for ways to pay off your credit cards more quickly, or get a lower interest rate:
- Don’t pay upfront.It’s illegal for a debt relief company to charge you a fee before they do anything to relieve your debt.
- Talk with your credit card company. For free. Call the customer service number on the back of your credit card. Ask for a payment plan that you’ll be able to afford.
- Consider a reputable credit counselor. They can help you develop a payment plan that works for you.
Spot a company making calls or claims like this? Report them at ReportFraud.ftc.gov.
Topics
Scams
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Consumer Alert
How to avoid holiday job scams
By
Jim Kreidler
Consumer Education Specialist
November 28, 2022
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For lots of us, the holiday season is a good time to pick up some part-time work. It’s when retailers and delivery services need extra help — and it’s when some extra income wouldn’t exactly hurt. But if you’re thinking of getting a job to make some extra cash this holiday season, know that scammers are looking for you. Do you know how to spot them?
To keep your money and personal information to yourself, follow these steps:
- Don’t pay to get the job. Scammers may promise you a job — if you pay them. But no legitimate job will make you pay for expenses or fees to get the job. Anyone who does is a scammer.
- Never give personal info up front. Some scammers will try to get your credit card, bank account, or Social Security number as soon as you’re in contact.
- See what others are saying. Search online for the name of the company plus the words “review,” “complaint,” or “scam.” You might find they’ve scammed other people.
- Talk to someone you trust — before you take a job offer or business opportunity. What do they think?
Learn more at ftc.gov/jobscams. And if you spot a job scam, tell the FTC at ReportFraud.ftc.gov.
All during December, as we start reflecting on 2022 and making plans for 2023, follow along as we discuss ways for you to keep more of your hard-earned money by avoiding scams. We’ll cover things like spotting scammers who ask for gift cards, what to do if your online order never arrives, as well as how to make sure your year-end donations go to the organizations you want — not to scammers.
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Business Blog
Hey, Google and iHeartMedia: FTC doesn’t heart deceptive endorsements
By
Lesley Fair
November 28, 2022
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If there’s one point to take from the FTC’s action against Google and iHeartMedia, it’s that the FTC doesn’t heart endorsements given by people who haven’t actually used the product they recommend. In proposed settlements announced in conjunction with actions brought by State Attorneys General, the FTC alleges that Google and iHeartMedia aired nearly 29,000 ads featuring iHeart radio personalities touting their positive personal experiences with Google’s Pixel 4 phone when the purported endorsers hadn’t used the product. The combined financial penalties in the state actions: $9.4 million.
The largest owner of radio stations in the United States, iHeartMedia has more than 850 AM and FM stations and also streams content online with a total of 245 million listeners each month. iHeartMedia gives selected on-air personalities the option to make more money by recording ads for specific clients that will run on iHeart stations.
Enter Google. Through its media buying agent, Google paid iHeartMedia more than $2.6 million to have its on-air personalities record ads for the company’s Pixel 4 to run on iHeartMedia stations. According to the complaint, Google spent almost $2 million on similar arrangements with smaller radio networks unaffiliated with iHeartMedia.
The FTC says Google provided iHeartMedia and the other networks with scripts for the radio personalities to use in recording ads in English and in Spanish. The typical script lauded many features of the Pixel 4, singling out the camera’s “studio-like photos” and the performance of its Night Sight Mode at night and in low light. The scripts included multiple first-person references to how the endorser had supposedly used the phone – for example, for taking photos at “my son’s football game,” “my mom and dad’s 50th birthdays,” or “my daughter’s school play.”
Early in the campaign, iHeartMedia got Google’s approval to have its on-air personalities “customize certain parts of the script pending what’s relevant to their personal lives (i.e., if they have kids, involved in certain activities/hobbies, etc.).” In October 2019, 43 iHeart personalities at stations in 10 different markets each recorded ads for the Pixel 4 using language identical or substantially similar to what was in Google’s scripts. Some of them personalized how they claimed to use the Pixel 4. Those ads aired over 11,200 times between October and December 2019.
But regardless of what the radio personalities stated in the ads, the FTC says they all had one thing in common: None of them had ever actually owned or regularly used Google’s Pixel 4.
In response to an iHeartMedia request for the phones, a Google employee said the company would “not be able to provide devices at this time,” and instead provided a link to a webpage about the phone’s features, noting that “our team has also provided [a] write-up on how to talk about the device.” Despite the fact that both Google and iHeartMedia were aware that the on-air personalities hadn’t actually used the Pixel 4, iHeartMedia continued to get its personnel to record similar ads – ads that aired thousands of times. Google ultimately provided iHeartMedia with only five Pixel 4s. In addition, the FTC says Google made deals with other networks to get their on-air personalities to give similar endorsements, also without having actually used the Pixel 4.
The FTC complaint alleges that Google and iHeartMedia violated the FTC Act by falsely representing that iHeart personalities owned or regularly used Pixel 4s and that they had used the phones to take pictures at night. The complaint also charges Google with making similar claims about radio personalities not affiliated with iHeart.
State settlements impose a total of $9.4 million in financial penalties. Arizona, California, Georgia, Illinois, Massachusetts, and New York announced settlements with Google and iHeartMedia. Texas has also settled with iHeartMedia.
In addition, the proposed FTC order against Google prohibits it from making misrepresentations that an endorser has owned or used certain products or about their experience with those products. The proposed iHeartMedia order prohibits it from making misrepresentations that an endorser has owned or used any product or service or about their experience with the product or service. Once the proposed orders are published in the Federal Register, the FTC will accept public comment for 30 days.
What can other companies take from the actions in this case? As the FTC Endorsement Guides make clear, “When the advertisement represents that the endorser uses the endorsed product, the endorser must have been a bona fide user of it at the time the endorsement was given.” There’s no excuse for any advertiser – and especially companies like Google and iHeartMedia – to ignore that truth-in-advertising fundamental and go ahead with a campaign they know to be untruthful. Furthermore, in transactions like the deal between Google and iHeartMedia, legal compliance is a two-way street. Both companies are responsible for ensuring their advertising claims are truthful and both companies may be held liable when they fail that basic obligation to consumers.
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