## Facts

- Louis Fleet, Sarah Morrison, and the Philadelphia Unemployment Project, on behalf of a class of financially distressed consumers (many unemployed, disabled, or facing foreclosure), sought help from United States Consumer Council, Inc. (USCC), which advertised itself as offering assistance in resolving debt problems.   
- USCC’s marketing targeted people in serious financial trouble and suggested that it could help them “get out of debt” or solve their financial problems.   
- In reality, USCC primarily referred customers to specific attorneys to file Chapter 13 bankruptcy petitions rather than providing substantial counseling or a range of financial services.   
- USCC charged each consumer a fee of approximately $195–$260 for this referral service, even though comparable referrals were available without charge through local bar association lawyer‑referral programs.   
- USCC used the name “United States Consumer Council” and an eagle insignia, creating the misleading impression that it was a governmental or quasi‑governmental agency.   
- Plaintiffs filed a class action adversary proceeding in the bankruptcy case, alleging that USCC’s conduct was unconscionable and constituted unfair and deceptive trade practices under New Jersey law, and sought to hold USCC and its principal, Jack Rhode, liable.   

## Issues

1. Whether USCC’s marketing, fee structure, and referral-only services constituted unfair, deceptive, and unconscionable practices under the New Jersey Unfair and Deceptive Acts and Practices statute.   
2. Whether charging financially distressed consumers substantial fees for a service (attorney referral) that could be obtained elsewhere for free rendered the service contract unconscionable.   
3. Whether Jack Rhode, as founder, sole shareholder, and chief operating officer of USCC, could be held personally liable for the unfair and deceptive practices carried out through USCC.   

## Decision

- The court held that USCC’s practices were unfair, deceptive, and unconscionable under New Jersey’s consumer‑protection law.   
- The court found the fees charged by USCC to be unconscionable because consumers could obtain essentially the same attorney‑referral service from bar association programs at no cost.   
- The court concluded that the marketing scheme, including representations about debt relief and the implied governmental affiliation (name and eagle emblem), misled consumers and amounted to a prohibited “bait and switch” tactic.   
- The court held Jack Rhode personally liable for the statutory violations, given his central role and control over USCC’s operations and deceptive practices.   
- The district court entered judgment for the plaintiff class against USCC and Rhode, awarding each class member treble damages equal to three times the amount paid to USCC, with precise damage amounts to be determined in subsequent bankruptcy‑court proceedings.   
- The court permanently enjoined USCC and Rhode from providing legal advice regarding debtor‑creditor law or bankruptcy, preparing or filing bankruptcy documents, soliciting clients for such services, misrepresenting their services or government affiliation, and charging fees grossly in excess of fair market value.   

## Legal Principles

- A service contract may be deemed unconscionable where the price charged is grossly disproportionate to the value of the services and significantly exceeds the cost of comparable services readily available to consumers (e.g., free bar‑association referral programs).   
- Misleading marketing that promises broad financial counseling but delivers only a limited, pre‑packaged service (such as automatic referral for Chapter 13 filings) can constitute unfair and deceptive practices and a prohibited “bait and switch” under consumer‑protection statutes.   
- Use of names, symbols, or emblems suggesting affiliation with the United States government, when no such affiliation exists, is a deceptive practice that supports liability and injunctive relief.   
- Corporate officers and controlling shareholders may be held personally liable under consumer‑protection statutes when they directly participate in, control, or authorize the unfair and deceptive practices of the corporation.   
- Remedies for unfair and deceptive practices may include class‑wide treble damages and broad injunctive relief prohibiting future deceptive conduct and overreaching fee practices.   

## Conclusion

In re Fleet v. United States Consumer Council, Inc. stands for the proposition that debt‑relief marketing schemes that exploit financially vulnerable consumers through misleading representations and excessive fees for simple attorney referrals violate consumer‑protection laws and are unconscionable. Courts may respond with treble damages, personal liability for responsible corporate officers, and sweeping injunctive relief to halt deceptive practices and prevent similar future misconduct.


In re Fleet v. United States Consumer Council, Inc., 95 B.R. 319 (E.D. Pa. 1989)