Recently the FTC won injunctive relief after filing a complaint against ten phony mortgage relief operations. The complaint alleges that three individuals and seven companies “prey on financially distressed homeowners by luring them into membership programs or loan modification services with promises that they will receive legal representation . . . to save their homes from foreclosure.” Defendants charged up-front fees and then failed to follow through on their promise of services. A temporary restraining order was issued against Defendants, freezing their assets and shutting down their businesses and websites.
The FTC’s complaint alleges that Defendants violated FTC Act §5(a) and the Mortgage Assistance Relief Services (MARS) Rule by charging up-front fees and then not performing promised services. FTC Act §5(a) prohibits “unfair or deceptive acts or practices in or affecting commerce.” The MARS Rule prohibits “any mortgage assistance relief service provider from requesting or receiving payment of any fee or other consideration until the consumer has executed a written agreement between the consumer and the consumer’s loan holder.” The FTC asserts that “consumers have suffered and will continue to suffer substantial injury as a result of Defendant’s violations of the FTC Act and the MARS Rule,” while Defendants have been “unjustly enriched as a result of their unlawful acts or practices.”
The District Court for the Central District of California granted the FTC’s injunctive request and temporary restraining order pursuant to Rule 65(b) of the Federal Rules of Civil Procedure. The court found “good cause” to believe the allegations and future harm that could occur. Defendants are jointly and severally liable for the alleged practices because they have common ownership, business functions, employees, office locations, and have commingled funds.
Click here to read the entire complaint.