Complain about a product or service

AmeriDebt To Close as Part of FTC Settlement

March 23, 2005
AmeriDebt, Inc. will shut down its debt management operation as part of a settlement of Federal Trade Commission charges that it deceived consumers into paying at least $170 million in hidden fees.

Credit Counseling • FTC Charges Home Buying Operation With Credit Repair Scheme • FTC Charges Express Consolidation Misleads Consumers • Debt Free Agrees to West Virginia Refunds • Ohio Sues "Credit Counselor" For Deceiving, Threatening Consumers • Debt Management Telemarketers Settle FTC Charges • FTC Shuts Down 20 "Credit Repair" Schemes • FTC Sues "Debt Elimination" Programs • AmeriDebt Founder Settles FTC Charges for $35 Million • IRS Plans to Yank Tax-Exempt Status of 20 Credit Counselors • IRS Revokes Tax-Exempt Status of Four Credit Counseling Agencies • Three Debt Management Firms Settle Federal Charges • AmeriDebt To Close as Part of FTC Settlement • Credit Counseling Riddled With Fast-Buck Promoters, Congress Finds • Credit Counselors Not Always What They Seem • Credit Counseling Scams On the Rise • Lenders Ratchet Down Payments to Credit Counselors --- • More about Credit Counseling

The FTC charged that the company misrepresented that it was a nonprofit credit counseling organization that would teach consumers how to manage their finances for no up-front fee.

The settlement requires AmeriDebt to transfer all current clients’ accounts to a third party and bars the company from participating in any aspect of the credit counseling business in the future.

The settlement does not include other defendants in the case. The FTC’s case against Andris Pukke, DebtWorks, and the relief defendant, Mrs. Pukke, will continue.

In a complaint filed in November 2003, the FTC charged that AmeriDebt, Inc., DebtWorks, Inc., and Andris Pukke deceived consumers with claims that AmeriDebt was a nonprofit organization that could help consumers get out of debt without an up-front fee. The FTC charged that, rather than operating for charitable purposes as advertised, AmeriDebt was funneling profits to affiliated for-profit entities, including DebtWorks and Andris Pukke.

According to the FTC, AmeriDebt deceived new clients into making a “voluntary contribution” to enroll in the program. The FTC alleged that AmeriDebt kept these initial “contributions” as fees without consumers’ knowledge, rather than disbursing the money to consumers’ creditors as promised.

The FTC’s complaint also charged that, despite promises to teach them how to manage their money to avoid future debt, the defendants simply enrolled all customers in debt management plans (DMPs). In the DMP, consumers made a single monthly payment to AmeriDebt for all their unsecured debts; the payment was then to be disbursed to the consumers’ creditors.

The FTC charged AmeriDebt with deceptive practices and also with violating the Gramm-Leach-Bliley (GLB) Act by failing to provide consumers with required privacy notices. In addition, the complaint named Andris Pukke’s wife, Pamela Pukke, as a relief defendant.

In June 2004, AmeriDebt filed for bankruptcy protection in the U.S. Bankruptcy Court for the District of Maryland. At the request of the FTC and others, the bankruptcy court removed existing management and appointed a Trustee to oversee AmeriDebt.

For updates to the case, the FTC consumer hotline number for AmeriDebt is: 1-877-862-0886.

Report Your Experience
If you've had a bad experience -- or a good one -- with a consumer product or service, we'd like to hear about it. All complaints are reviewed by class action attorneys and are considered for publication on our site. Knowledge is power! Help spread the word. File your consumer report now.

Back to the top |