On June 17, 2011 the following case was filed, Jalenna Bowie v. Clear Your Debt, Global Client Solutions, Orion Processing, Derin Scott, Shannon Scott, and Pradeep Nair.
The case goes after the debt relief providers for violating the Credit Repair Organizations Act, violations of the Ohio debt adjusting statutes, violation of the Ohio Consumer Sales Practices Act, violation of the Ohio Credit Services Organization Act, conspiracy, misrepresentation, and aiding and abetting.
The case was filed in Ohio and makes the following allegations:
Approximately in the month of February 2008, Ms. Bowie discovered an internet website advertising Defendants’ debt negotiation services. Ms. Bowie entered her contact information into Defendants’ website in order to request contact from Defendants.
Upon information and belief, Defendants’ website made the following deceptive statements:
a. “Debt Settlement is the fastest and most cost effective way to become debt free without filing for bankruptcy. Debt settlement is the only way to eliminate substantial debt by reducing your principal balance. This means that you pay less overall and can be free from debt sooner! Also, unlike bankruptcy, debt settlement does not leave a negative record on your credit report.”
b. “ClearYourDebt works with you to put together a customized program specifically designed to relieve your unsecured debt burdens, avoid the hardships of bankruptcy and swiftly attain debt freedom!”
c. “If you are committed to eliminating your debt and want to avoid bankruptcy then we can help free you of your debts in the fastest way possible. The settlement process will require your commitment, patience and cooperation but upon completion of your personal program you will be able to start living your life without the burden of debt.”
d. “Following are the ClearYourDebt program benefits:
• Substantially reduce your principal balance
• Avoid bankruptcy
• Eliminate debt
• One low monthly payment
• Home ownership not required
• No credit checks”
Approximately in the month of February 2008, an agent of Defendants telephoned Ms. Bowie in Ohio, during which Ms. Bowie and the agent discussed Defendants’ debt negotiation services (the “Initial Phone Call”).
During the Initial Phone Call and at other various other times, an agent of the Defendant told Ms. Bowie that, as a result of using Defendants’ services, her credit rating would initially go down a small amount, but that once her debts were cleared up, that her credit rating would go up.
On or about February 14, 2008, Ms. Bowie accessed Defendants’ internet web site, and downloaded certain introductory materials regarding Defendants’ debt negotiation services (“the Intro Packet”).
The Intro Packet contained a letter on CYD letterhead which included the following:
a. a statement that Defendants’ debt negotiation services are the “best overall solution
for your debt-reduction needs.”
b. a statement that Defendants’ debt negotiation services are the “quickest and most
c. an implication that Defendants’ program was founded on “Christian beliefs and
d. a statement that “[...] we assist you in reducing your Debt-to-Income ratio, thereby
allowing you to take the next step in securing your financial future.”
e. a statement that “The use of our unique debt-reduction strategies has helped our clients successfully get their finances back on track and regain their financial borrowing power” and implied that CYD has helped “thousands” of clients
f. a reference to “Our Client Services” department g. Upon information and belief, the statements described in sub-paragraphs a. through f. above were not true.
The Intro Packet contained a single copy of a notice of cancellation. According to the form, Ms. Bowie was only allowed to cancel if she would have signed an “acknowledgement [sic] of cancellation effects” form, in which Ms. Bowie would have had to agree that creditors’ “pursuit of me for debt collection purposes is acceptable to me” and which had to be notarized.
The Intro Packet contained a contract (labeled “Client Services Agreement”) for Ms. Bowie to sign to start Defendants’ debt negotiation service. It contained certain unconscionable limitations on dispute resolution.
The Client Services Agreement included fees to be paid to Defendants, including a flat fee unrelated to success of the program, one third of which was “earned” when Defendants merely reviewed Ms. Bowie’s budget, one third “earned” when initial correspondence to creditors was prepared, and the final one third “earned” when Defendants received a notification from Ms. Bowie to begin a settlement on any account.
The Client Services Agreement called for a fee to be paid to CYD of fifteen per cent of her debt included in the program, which fee amounted to $8,010.
The Client Services Agreement stated that CYD would not give any predictions about the outcome or time frame of Defendants’ debt negotiation program.
The Client Services Agreement stated that Ms. Bowie had “independently” of CYD decided to stop paying creditors, which was not true.
The Client Services Agreement stated that only “approved personnel” would have access to Ms. Bowie’s personal information, which upon information and belief was not true.
The Intro Packet contained a client information authorization form, which allowed CYD to discuss Ms. Bowie’s financial situation with creditors, which allowed CYD to obtain Ms. Bowie’s credit reports, and which was stated to be assignable and transferable.
The Intro Packet contained a savings and payment planner document, which estimated that Ms. Bowie would be able to settle her included debts at 39 per cent of the balance, which called for a “service fee” to CYD of $8,010, and which called for a 24-month program.
The Intro Packet contained a “Special Purpose Account Application” with Rocky Mountain Bank & Trust in Colorado, which made reference to an “attached” document purportedly containing information about various fees and terms of the bank account.
There was no attachment to the “Special Purpose Account Application” which disclosed to Ms. Bowie information about various fees and terms of the bank account.
The “Special Purpose Account Application” stated that Global was an agent of Rocky Mountain Bank & Trust.
The Intro Packet contained certain statements and provisions which were contrary to what Ms. Bowie was told orally by an agent of Defendants.
When Ms. Bowie agreed to use Defendants’ debt negotiation services, she had no opportunity to alter the forms or change the terms in the Intro Packet.
On or about February 14, 2008, Ms. Bowie electronically signed the “Client Service Agreement” and certain related documents, and transmitted them to Defendants, in order to use Defendants’ debt negotiation services.
On or about February 15, 2008, an agent of Defendants which CYD described as a “credit specialist” communicated with Ms. Bowie about certain changes to the “Client Services Agreement” and her payment plan, including changing the term to 30 months, a reduced monthly payment, and a statement that “you will be” paying a total of $28,836, and saving $24,564. The statement was not true. On or about February 15, 2008, Ms. Bowie agreed to the changes in terms.
At some point in 2008, Ms. Bowie learned that with regard to one of the two debts included in Defendants’ debt negotiation program, the company attempting to collect the debt from Ms. Bowie stated that it refused to deal with CYD. Ms. Bowie later settled that debt herself. Defendants did not reduce or refund any part of their fees, despite Ms. Bowie’s request that Defendants do so.
Regarding the first debt that Ms. Bowie settled, Ms. Bowie received a notice from the Internal Revenue Service indicating that the amount of debt not paid was considered income assessable on her income tax return for 2009 in the amount of $10,486.24.
In August 2009, an agent of the Defendants stated to Ms. Bowie that she would be provided an Ohio-licensed attorney to assist her with the other account in the debt negotiation program. Ms. Bowie was referred to an attorney who agreed only to write one letter to attempt to prevent a law suit on the second debt. That attorney wrote the letter, which did not prevent the law suit. That attorney did nothing further for Ms. Bowie.
On or about November 4, 2009, Ms. Bowie demanded a refund.
Defendants never paid a refund to Ms. Bowie.
On April 8, 2010, the second creditor in the debt negotiation program filed a civil suit against Ms. Bowie (“the Collection Suit”).
At various times from May 2010 through July 2010, various agents of Defendants who were not licensed to practice law in Ohio attempted to “help” Ms. Bowie with the Collection Suit, including the following:
a. attempts to communicate with agents of the creditor and creditor’s attorney’s law firm
b. a statement on June 4, 2010 to Ms. Bowie that an agent of Defendants intended to run
some documents through the court
c. a statement on June 22, 2010 or June 23, 2010 that an agent of Defendants had telephoned counsel for the creditor and relayed information about the Collection Suit, and advised Ms. Bowie that opposing counsel was waiting on a document from the judge
d. attempts to negotiate the debt while the Collection Suit was pending
e. advising Ms. Bowie regarding an approaching court hearing
f. a statement on June 29, 2010 to Ms. Bowie that an agent of Defendants had met with the owners of his firm (believed to be Derin Scott and Shannon Scott) regarding the Collection Suit
g. a statement on July 7, 2010 in which an agent of Defendants passed on to Ms. Bowie a legal opinion obtained from the neighbor of one of his associates, about a court document filed in the Collection Suit, and in which the agent advised Ms. Bowie on how to prepare for a court hearing, what she should say at the hearing, and advised that Defendants would provide the information she needed for court, and advised that the agent would “be here with you till the end of this and will do my best to make this right.”
h. a letter to the Ohio court dated July 9, 2010, sent by an agent of the Defendants, Defendant Pradeep Nair, in which Mr. Nair advocated for Ms. Bowie
i. a statement to Ms. Bowie by another agent of the Defendants on July 12 that included a copy of the July 9, 2010 Pradeep Nair letter
j. a letter to the Ohio court dated July 14, 2010, sent by an agent of the Defendants, Defendant Pradeep Nair, in which Mr. Nair advocated for Ms. Bowie, a copy of which was sent to the creditor’s attorney
k. statements made by an agent of Defendants on July 19, 2010, in which the agent suggested that Ms. Bowie should speak to another agent of Defendants about questions she may have about the Collection Suit
l. a request by an agent of Defendants on July 21, 2010 to Ms. Bowie that she sign a document presented by the agent for use in the Collection Suit
m. legal advice to Ms. Bowie on or about July 21, 2010, in which the agent advised Ms. Bowie to threaten the creditor or its counsel in the Collection Suit with a law suit
n. a statement by an agent of Defendants to Ms. Bowie on or about July 27, 2010, in which the agent advised Ms. Bowie that he had received court documents and wished to advise her regarding them, and in which he provided legal advice to Ms. Bowie, encouraging her to sign an agreed judgment entry in the Collection Suit
Defendants advised Ms. Bowie to sign an agreed judgment entry in the Collection Suit, even though the proposed entry was inconsistent with the terms of a settlement that had been reached, and the entry would have given the creditor a judgment for substantially more than the settlement amount, and would have resulted in a lien against Ms. Bowie’s home, which was not part of the settlement.
Defendants’ advice to Ms. Bowie regarding the Collection Suit was substantially below the standard of care required of an attorney at law licensed in Ohio.
Upon information and belief, consumers of Defendants’ debt negotiation services are routinely sued by creditors.
Upon information and belief, a number of major creditors have policies under which they do not negotiate with the suppliers of debt negotiation services such as Defendants’.
On numerous occasions, Defendants’ agents directed emails to Ms. Bowie in Ohio.
Upon information and belief, Ms. Bowie paid Defendants over $5,000.
Upon information and belief, some of the money Ms. Bowie paid to the Defendants was distributed to each of the Defendants.
The price charged by Defendants was unconscionable.
The price charged by Defendants was not reasonable.
Many of the statements and representations made by Defendants were false.
Defendants failed to disclose to Ms. Bowie in advance, that debt settlement services were to be performed by Orion or other persons other than CYD.
The services to be performed, and those actually performed by, Defendants, were for Plaintiff’s personal use.
As a result of the acts, practices, and omissions of the Defendants, Plaintiff has suffered damages, including but not limited to payments to Defendants, aggravation, frustration, stress and wasted time.
The acts and omissions of the Defendants were reckless, wanton, willful and gross, and Defendants’ conduct demonstrates a conscious disregard for the rights and safety of other persons that has a great probability of causing substantial financial harm. – Source
This case was filed by:
Gregory S. Reichenbach (Ohio Bar #0077876)
P.O. Box 256
Bluffton, OH 45817
FAX: (419) 529-8310
Attorney for Plaintiff
Global Client Solutions, Clear Your Debt, Orion Processing, Derin Scott, Shannon Scott and Pradeep Nair Hit With Lawsuit by Steve Rhode
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