The government yesterday announced it has reached settlements with three companies accused of bilking thousands of debt-ridden people out...

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WASHINGTON — The government yesterday announced it has reached settlements with three companies accused of bilking thousands of debt-ridden people out of more than $100 million with schemes that often left clients in worse financial shape.

The Federal Trade Commission settled lawsuits it brought last year against National Consumers Council (NCC), Better Budget Financial Services and Debt Management Foundation Services, which have since ceased most operations.

The companies agreed to give back a total of more than $25 million to consumers, and two are in the process of being shut down. None of the owners faces jail time as the FTC does not have criminal authority.

Though the individuals involved are allowed to continue in the consumer-debt business, they would face tougher penalties if they repeat the fraud.

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“If there are other companies out there thinking that they can deceive consumers who are in financial distress, we’ve got three words for them: ‘Give it up,’ ” Lydia Parnes, acting director of the FTC’s Bureau of Consumer Protection, said.

In the largest settlement, National Consumers Council (NCC), a California-based group of companies and individuals, failed to deliver on promises of free debt counseling, instead passing client information to other organizations that charged thousands of dollars for programs that rarely worked, according to the FTC.

The company is winding down its business and has returned approximately $24 million of the $84 million it took from consumers, the FTC said. Three company officers also have personally paid back a total of $3.9 million to consumers.

Separately, regulators said Florida-based Debt Management Foundation Services falsely promised to cut debts in half, shrink interest and rebuild credit, while charging consumers upfront fees as high as $1,000.

The company is being liquidated, and its owners must pay back a total of $250,000 and surrender their interest in the company.

In another case, the FTC said Better Budget Financial Services of Massachusetts made false claims it could slash debt while advising customers to stop paying creditors. Ultimately, the scheme forced some into bankruptcy as they incurred court costs to fight creditors seeking collection, the FTC said.

The company agreed to return $1.3 million to consumers, and its owners must post a $2 million bond before entering the business again.

Travis Plunkett, legislative director at the Consumer Federation of America, applauded the FTC but said consumers should be on guard.

The FTC urges consumers to be wary of high fees and to choose a credit counselor who provides a detailed written agreement.

Material from Reuters is included

in this report.