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Tax debt scammers

Posted: October 21, 2010 5:28 p.m.
Updated: October 22, 2010 5:00 a.m.

Finally.

The consumer protection division of the Federal Trade Commission has at last decided to get tough with the scamming firms that promise people they’ll slash their debt to the Internal Revenue Service. There are many companies that follow the same route, advertising on television, the Internet or in print promising miracles in dealing with the nation’s tax agency. They falsely claim they can negotiate large tax debts away. Others promise to eliminate or greatly reduce credit card debt. In reality, they take upfront payments and do little or none of what they promise.

If you listen to satellite radio, you’re undoubtedly familiar with these hucksters. News programs are crammed with false advertisements making exorbitant claims. And until now, the FTC has basically sat back and done nothing about it. But earlier this week, the agency asked a federal judge to freeze the assets of a company that calls itself American Tax Relief. Officials say the company took $60 to $100 million in upfront fees, rarely delivering any protection. It did, however, dole out about $30 million to the company’s owners and their relatives, charged the FTC. In fact, “rarely” is an optimistic term when it comes to benefits; in actuality the agency said of 20,000 clients who spooned out money to American Tax Relief, not a single one got any benefit.

Some of the blame must also fall on the media outlets that have accepted these scam companies’ money for years. They need to clean up their acts, too, including such giants as CNN and Fox News. We’re glad to see the FTC stepping up to the plate on this one, and we hope the agency follows up with the many companies that are doing the same thing.

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