The Federal Trade Commission said yesterday that it started mailing 460,000 checks worth a total of about $20 million to consumers burned by Maryland credit counselor AmeriDebt Inc.
Consumers won't receive all the fees collected by the now-defunct AmeriDebt or its affiliated credit counseling agencies. But the more they paid, the more they will get back.
Many consumers paid hundreds of dollars in fees.
"This has been a big success," FTC attorney Lucy Morris said. "Although we can't get consumers all their money back, we were able to stop what we thought was a blatant deceptive practice."
The FTC also banned AmeriDebt's founder, Andris Pukke, from the industry and recovered many of his assets, which are now being returned to consumers, she said.
The restitution disbursement signals the end of the AmeriDebt saga. The Germantown nonprofit organization was launched in late 1996, just as credit-card debt started soaring. It quickly grew into one of the nation's largest credit counseling agencies through its heavy use of late-night TV advertising.
It wasn't long before consumers and their advocates started complaining that AmeriDebt charged hefty fees and left debtors in worse shape. Regulators were slow to respond. But in 2003, several states and the FTC sued AmeriDebt and Pukke for deceptive practices. Pukke also was accused of steering millions of dollars from AmeriDebt to his for-profit processing company to support his lavish lifestyle.
Pukke agreed in 2006 to return up to $35 million to consumers.
Consumers don't have to do anything to get their checks. The FTC used the credit counselors' records to determine the amount consumers should be paid. Just make sure you cash the checks that should be arriving in the next week, Morris said.
