FTC and Texas AG File Suit Against IFC Credit

According to the FTC's complaint filed June 6, IFC Credit Corporation purchased NorVergence rental agreements valued at $21 million, with individual contracts ranging from $4439 to $160,672. The complaint alleges that despite making payments, no customers received telecommunications services from NorVergence for more than a short period of time, and many consumers received none. It further alleges that IFC continued to finance the fraudulent scheme by accepting new rental contracts, despite NorVergence's failure to provide the promised services and the resulting high rate of default among IFC customers. In addition, long after NorVergence entered bankruptcy in 2004, IFC continued to tell consumers they were obligated under the rental agreements because the payments are for the device, not for services.

Under the lawsuit, brought under the FTC Act, which prohibits unfair or deceptive business practices, the FTC charges IFC with misrepresenting that consumers have no defenses to payment on the NorVergence rental agreements; harming consumers by unfairly accepting and collecting on the rental agreements; and unfairly filing debt collection lawsuits in courts far from consumers' locations. The FTC is asking the court to order all rental agreements terminated and is seeking refunds for payments consumers made for services they never received. The FTC also is seeking a preliminary injunction to stop IFC from continuing any debt collection while the suit proceeds.