Debt Relief Scammers Banned From Industry, to Pay $425k in Penalties

The operators of a debt relief scam have agreed to a permanent ban from the industry and will pay $425,000 out of a $5.3 million fine as part of a settlement that was announced by the Federal Trade Commission and the Attorney General of Florida.

The FTC and Florida AG sued Gino de Paz, Grace de Paz, and Shabana Khublal back in 2020 for allegedly violating the Telemarketing Sales Rule, the FTC Act, and the Florida Unfair Trade Practices Act by selling credit card interest rate reduction services to consumers throughout the United States. The defendants allegedly posed as affiliates of credit card companies and claimed that consumers could save thousands of dollars in credit card interest by paying off their debt sooner. But what the defendants did generally left consumers deeper in debt than when they started. The defendants sometimes went as far as opening new credit cards that offered low introductory interest rates and transferred the balances of consumers’ existing debt to the new cards. For that, customers paid upfront fees of between $995 and $4,995 while also paying “substantial” fees to transfer the balances, according to the FTC.

“The defendants in this case were taking advantage of Americans dealing with rising debt by falsely promising to permanently reduce their credit card interest rates,” said Samuel Levine, Acting Director of the FTC’s Bureau of Consumer Protection, in a statement. “The FTC is proud to partner with the Florida Attorney General to stop these scams.”

Along with being permanently banned from the debt relief business, the de Pazes will pay a monetary penalty of $225,000 and Khublal will pay $200,000.

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