Consumers will receive a total of $1.87 million recovered from funds by the Federal Trade Commission from an illegal telemarketing operation known as Expense Management America.

According to the agency, the Canada-based operation charged homeowners an upfront fee for debt and mortgage relief services that it never provided. The FTC filed suit against Expense Management (as well as other defendants) in September 2012, accusing the company of violating the Federal Trade Commission Act, the Telemarketing Sales Rule (TSR), and the Mortgage Assistance Relief Services (MARS) Rule.

Expense Management presented itself as the solution to all of a consumer's financial problems, the FTC alleged. It cold-called consumers—including those on the Do Not Call Registry—and sent brochures and financial documents via e-mail in order to obtain authorization to withdraw funds from checking accounts. The defendants (including six affiliated companies and five individuals) then charged an upfront fee ranging from $2,200 to $10,000 and told consumers the money was being used to pay off debt, the agency said.

The defendants also told consumers that because of their relationships with lenders and their ability to negotiate on behalf of large groups, they could possibly "substantially reduce" debts including mortgages, credit cards, student loans, and car payments. The defendants also advised consumers to abide by the "Golden Rule": stop talking with creditors and let Expense Management deal with them, with claims like: "Sometimes [creditors will] go to extremes in an attempt to force you into an agreement by saying things such as 'We've never heard of E.M.A.' Or 'We don't deal with them.' … Sometimes [creditors] even break the law. Don't be fooled by them. Let E.M.A. do the talking!"

But in reality, the defendants' claims that they could secure more affordable payments and reduce the principal on consumers' loans were false, the agency said, as were claims about the price and material aspects of their debt relief service. Moreover, the FTC claimed that the defendants violated the law by charging advance fees for debt relief, by calling consumers whose numbers were listed on the Do Not Call Registry, by telling consumers not to communicate with their lenders, and by failing to make the disclosures required by the MARS Rule.

Over the course of almost three years, the FTC obtained a series of orders limiting the defendants' conduct and collecting money for consumers. The $1.87 million will be paid to 1,630 consumers, with the amount of each check varying based upon the amount of each consumer's loss.

To read the complaint and various court orders in FTC v. E.M.A. Nationwide, click here.

Why it matters: The case against Expense Management, brought in conjunction with the DOJ and HUD, was part of the agency's Distressed Homeowner Initiative, an effort "to stop predatory foreclosure rescue, mortgage modification, short sales, and bankruptcy schemes that targeted distressed homeowners." More than 40 cases were brought by the FTC as part of the initiative, including the action against Expense Management.