WASHINGTON — The Federal Trade Commission earlier this week filed contempt charges against a promoter of credit repair and debt relief services and three of his companies, alleging that they continued their deceptive marketing practices in violation of a federal court order.

The FTC charged that the defendants tried to take advantage of financially strapped consumers by falsely telling them that almost anyone can qualify for food stamps, and by encouraging them to mislead the government about their finances to qualify for the food stamp program.

SEEKING COMPENSATION FOR CONSUMERS

As part of the FTC’s ongoing efforts to protect consumers in financial distress, the agency seeks to ban the defendants from selling credit repair, debt relief, or government-related goods or services, and make them pay compensation to consumers.

The FTC charged that Sam Tarad Sky, Allrepco LLC, Credit Restoration Brokers LLC (CRB), and Debt Negotiations Associates LLC (DNA) violated the terms of a March 2010 court order that resolved charges that the defendants deceptively marketed credit repair and debt relief services, and illegally charged an up-front fee for credit repair services.

The court order bars them from deceptively marketing any good or service and from violating the Credit Repair Organizations Act.

POSTED ON WEB SITES

Despite the court order, the FTC alleges that Sky and his companies used two Web sites to promote a food stamp application guide that falsely promised it would show how “almost everybody” or “virtually everyone” can “legally apply for food stamps” or “legally get [food stamps] for free.”

The defendants sold the guide for either a one-time fee of $99, or as part of “Financial Solution Package” that cost consumers a monthly recurring fee of up to $139.

According to the FTC, under longstanding government restrictions, only low-income households can qualify for the federal food stamp program.

FTC: FIRM ENCOURAGED CONSUMERS TO PROVIDE MISLEADING INFORMATION TO GOVERNMENT

 In the guide, however, the defendants repeatedly tell consumers to provide the government with misleading information in order to inflate their chances of being deemed eligible – advising them, for example, to have high-income residents briefly move out of their household. The FTC charged that following this advice could leave consumers open to civil or criminal charges by the government.

In addition, the FTC charged that the defendants marketed the food stamp application guide throughout the United States, without telling consumers that the guide contained information about the application process in only one state – Florida.

The FTC also alleged that the defendants charged up-front fees for credit repair services, failed to make required disclosures about their debt relief services, and failed to fully report Sky’s business activities, all in violation of the court order.