The FTC video on car loan repayment scams encourages pe... The FTC video on car loan repayment scams encourages people to keep making their payments. (FTC)

For regular readers of AOL Autos, it might come as a surprise that some people don't know how the whole car loan process works. But a recent move by the FTC to shut down a predatory lender shows there are plenty of scams afoot.

Hope For Car Owners LLC, a California company owned by Patrick Freeman, was a smooth-talking scam that promised they'd negotiate lower car loan payments for an upfront fee. As soon as they got their hands on consumer's cash, they held onto it and did nothing to help people out.

Now that the FTC has made it harder for scammers to work in the mortgage loan modification arena, they've moved on to auto loans, the FTC said. It's not an uncommon scam: This is the second group the FTC shut down another California company, Auto Debt Consulting, this year for the same issues.

Hope For Car Owners typically promised to reduce car payments by 30 percent to 50 percent for fees ranging from $200 to $500. They used a testimonial that said: "I was 4 months late and on the verge of losing my car to the repo man. Hope 4 Car Owners stepped in and not only stopped the repossession, but they negotiated to reduce my payments from $1200 a month to $548!!"

"Once the up-front fees were collected, the defendants did nothing to obtain the promised loan modifications, and consumers who tried to get refunds were denied," the FTC said. One consumer sent Hope For Car Owners $400, and followed directions to stop making payments on her loan. Her car company shortly sent her notice that her car was about to be repossessed.

The FTC fined Freeman, sole owner of the company, $362,388 for the scam and made him promise to stop making any similar claims. His company is now in default, the FTC said, and Freeman won't have to pay the fine because he is financially unable to.

The FTC has recently made dealer scams and auto lending practices part of its overall priorities in an attempt to help protect consumers who are experiencing financial distress, the agency said. This is the second case brought against a company promising car loan relief.

The agency has also put together a video, above, that educates consumers on how the loan process works.

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