WASHINGTON, D.C. — The Federal Trade Commission filed charges and requested a U.S. district court to stop the specific practices of two auto loan modification companies operating in California. The two companies charged include Hope for Car Owners LLC, NAFSO VLM Inc. and Kore Services LLC (doing business as Auto Debt Consulting).

The agency alleges that the defendants did not make any attempts to modify auto loans after collecting up-front fees and didn’t pay promised refunds for failing to do so. These companies also told consumers to pay them and, in turn, stop paying their auto lenders.

Auto Debt Consulting, of example, promised to reduce consumers’ monthly auto loan payments by 25 to 40 percent, but required up-front fees of between $350 and $799. On its Website, the company stated: “If you have engaged the services of Auto Debt Consulting for negotiating with your lender or bank on your behalf, and if for any reason you are dissatisfied with our services or we are unsuccessful in the negotiation process, we will provide a 100 percent money-back guarantee.”

In addition, the agency said one group of defendants told consumers to “hide [their] car[s] to avoid repossession.” The agency added that the promotional slogans used by the loan modification companies included “Join the thousands who have already saved,” “Consumer stimulus and bailout assistance,” and “Stop overpaying for a depreciating liability.” The defendants also gave toll-free numbers to consumers so telemarketers could sign them up for auto loan modifications, the FTC alleged.

The FTC asked the court to order the defendants to stop the alleged illegal conduct while the agency moves forward with the cases against the defendants.

The investigation comes on the heels of the FTC holding roundtable workshops to gather information about potential consumer protection issues that could arise during the sale, financing, or lease of vehicles. F&I contacted the FTC to find out what the agency is focusing on with regard to compliance in general, but Mark Eichorn, assistant director for the FTC’s Bureau of Consumer Protection’s Division of Privacy and Identity Protection, declined to provide specific details about any enforcement actions.

“Speaking generally, when we do compliance sweeps, investigations, etc., we use authorities granted the Commission,” Eichorn wrote in an e-mail. “Under Commission rules of practice, these actions are nonpublic until, for example, the commission votes to approve the issuance of a complaint or a complaint and consent agreement. As a matter of policy we neither confirm nor deny the existence of non-public law enforcement actions.”