FTC Files Lawsuit Against Ameridebt
FTC Files Lawsuit Against Ameridebt
FTC Files Lawsuit Against AmeriDebt Agency Alleges that “Credit Counseling†Firm Misrepresents Costs and Nature of Its Services
The Federal Trade Commission has filed a complaint in federal court charging that a national organization that promotes itself as a non-profit credit counseling agency is engaged in deceptive practices. According to the FTC’s complaint, the defendants have misrepresented that they charge no up-front fee for their services, that they operate as a non-profit, and that they teach consumers how to handle their finances. Additionally, the FTC charges that the organization failed to provide privacy notices to consumers as required by the Gramm-Leach-Bliley (GLB) Act. Separately, a service provider for the defendants has agreed to settle FTC charges regarding its role in the operation. The FTC also has reissued two updated consumer alerts on credit counseling.
The FTC’s complaint charges Maryland-based AmeriDebt, Inc.; DebtWorks, Inc.; and Andris Pukke; and also names Pamela Pukke (a/k/a Pamela Shuster) as a relief defendant. AmeriDebt has widely advertised its credit-counseling services on a national basis. DebtWorks serviced consumer accounts on behalf of AmeriDebt until the end of 2002. Andris Pukke currently owns and was chairman and CEO of DebtWorks, and was instrumental in founding AmeriDebt.
According to the Commission’s complaint, the defendants claim that AmeriDebt is a non-profit organization dedicated to assisting consumers with their personal finances. The FTC alleges that AmeriDebt does not operate for charitable purposes, but rather to make money for affiliated for-profit companies and individuals, including DebtWorks and Andris Pukke. In addition, the complaint alleges that the defendants do not teach consumers about their finances or how to handle debt in the future, despite claiming that they do. Rather, the defendants enroll all of their clients in “debt management plans†(DMPs). In a DMP, the client makes a single consolidated monthly payment to the defendants for all of their unsecured debts included in the plan, which the defendants then disburse to the creditors.