Recently, the U.S. District Court for the Central District of California temporarily halted the operations of a business “opportunity” and credit repair scam. The court granted the FTC’s ex parte application for a temporary restraining order with an asset freeze, and the court ordered the defendants to show cause why a preliminary injunction should not be issued. The FTC alleged in the original complaint three individuals and two limited liability companies engaged in deceptive business practices by making misleading statements in the promotion and sale of business opportunities and credit repair services, resulting in “approximately $50 million in harm.” The FTC highlighted the defendants’ promises of significant income and business success, which allegedly rarely materialized for consumers. The defendants also allegedly made false earnings claims, used misleading testimonials, failed to provide required disclosures as mandated by the FTC’s Business Opportunity Rule, and charged fees in advance of services rendered (contravening the FTC’s Credit Repair Organizations Act (CROA)). Additionally, the FTC argued the defendants’ credit repair services did not deliver the promised improvements to consumers’ credit scores.
The FTC is seeking a permanent injunction, monetary relief, and other remedies to prevent further consumer harm and address the violations of the FTC Act, the Business Opportunity Rule, CROA, and the Reviews and Testimonials Rule.
