WASHINGTON—The Federal Trade Commission is sending more than $1.2 million in refunds to consumers who lost money to Consumer Defense, a deceptive mortgage modification scheme.
The FTC is sending payments to 6,261 consumers, who will receive $201.34 each.
According to the FTC’s 2018 complaint, Consumer Defense operated under a number of names, including Preferred Law and American Home Loan Counselors, and deceived financially distressed homeowners by falsely promising to prevent foreclosure and make their mortgages more affordable.
“The defendants typically charged homeowners unlawful upfront fees in monthly installments of $650, falsely promising expert legal assistance,” the FTC said. “In many instances, consumers paid hundreds or thousands of dollars only to learn that the defendants had not obtained the promised loan modifications, and in some cases had never even contacted the lenders.”
Earlier Ruling
In 2019, a federal court ruled in favor of the FTC in the case, and ordered that the defendants’ assets be turned over to the FTC and liquidated to provide refunds to harmed consumers. The defendants, however, appealed the case, which was not resolved until 2022 when an appellate court upheld the ruling but sent the case back to the district court to re-enter the monetary judgment pursuant to Section 19 of the FTC Act after the U.S. Supreme Court's 2021 ruling stating that the Commission lacks authority under Section 13(b) of the FTC Act to seek monetary relief in federal court.
In 2023, the district court entered a monetary judgment under Section 19 of the FTC Act for the defendants' violations of the Mortgage Assistance Relief Services Rule, the FTC said.
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