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Credit Counseling, Credit Repair, Debt Settlement and Other Scams Are Target of FTC Sweep

The Federal Trade Commission recently annound operation Short Change, an effort to help curb abuses of consumers by groups claiming to offer help.

Here is a summary of the companies targeted under Operation Short Change.

  • California

    Mezey & Associates, Inc., Campos Chartered Law Firm, The Consumer Protection Law Center dba Consumer Law Center, LLC

    Desist and Refrain Order issued for unlicensed prorater activity – a person who for compensation receives money for the purpose of distributing it to creditors in payment of the debtors obligations.

    Blue Chip Financial Network, Inc., dba Blue Chip Debt Relief

    Desist and Refrain Order issued for unlicensed prorater activity – a person who for compensation receives money for the purpose of distributing it to creditors in payment of the debtors obligations.

  • Florida

    New Leaf Associates, LLC; Quantum Business Consultants, LLC

    Deceptive practices with regard to alleged debt termination and credit repair program. The subjects claimed to offer a system to eliminate debts, but there was never a viable system. Also, subjects have failed to honor refund policy, falsely claimed to have professional liability insurance approval of the Federal Trade Commission, engaged in false and deceptive representations concerning the effectiveness of their program and the status of OAG’s investigation, and failed to comply with federal Credit Repair Organizations Act, including by taking advance fees and not using required contract.

    The Attorney General’s Office reached a settlement with multiple defendants named in a Pinellas County lawsuit that involved a “debt elimination” scheme operating under the name of New Leaf Associates, LLC. New Leaf victimized thousands of consumers nationwide by promising consumers there was a secret “legal administrative process” to completely eliminate debt and improve credit scores in the process. The Attorney General obtained an injunction to stop the operation of the scheme, but has been litigating to obtain a return of the funds to the consumers. The settlements with 16 defendants prohibit the defendants from participating in or marketing any similar scheme and require payments of costs and fees and restitution for Florida victims amounting to approximately $320,000 and additional settlement negotiations are ongoing with other defendants.

    Family Credit Counseling Corporation

    Family Credit Counseling Corp, a Ft. Lauderdale, Fla.-based debt relief service, was among other agencies settling with the states. That company allegedly misappropriated debt management programs, along with, debt reduction malpractice.

    Financial Freedom Resources

  • Illinois

    SDS West Corp. and Nationwide Support Services

    Lawsuit filed against debt settlement service providers alleging violations of the Consumer Fraud and Deceptive Business Practices Act.

    Debt Relief USA

    Lawsuit filed against debt settlement service providers alleging violations of the Consumer Fraud and Deceptive Business Practices Act.

    US Credit Find, Inc., and owner Aaron Stanz

    Purported to offer an online tutorial to help consumers fix their credit. However, consumers who filed complaints with Madigan’s office report they never used the defendants’ services nor authorized the monthly $9.99 fee that appeared on their telephone bills. Further, Madigan’s complaint alleges that when consumers disputed the charges, the defendants falsely claimed they had received approval from someone authorized to place charges on the phone bill.

  • Louisiana

    Credit Counseling Services of the First Coast, Millennium, Next Step Credit, Quick Fix Credit of Baton Rouge

    Cease and desist orders were issued under the state’s Credit Repair Services Organization Act for operating without the required surety bond and other violations. A petition for injunctive relief and for unfair trade practices has been filed against Next Step Credit for its alleged continued operation.

  • Missouri

    Credit Solutions of America (CSA)

    Attorney General Chris Koster filed suit against this company for advertising to consumers that it could get people out of credit-card debt and lower their monthly payments, but not delivering the services promised. Koster said Credit Solutions of America marketed to Missourians that it could reduce their payments by fifty percent, lower their monthly bills, and get consumers out of debt within three years. The Attorney Generals’ investigation, however, found that the company took customers’ money, but did little or nothing to solve their debt problems.

  • North Carolina

    Possibilities Unlimited

    Possibilities Unlimited was using illegal robocalls to pitch lower credit card rates in exchange for a fee. It used generic names such as Credit Card Services and Card Services. A judgment and permanent injunction were entered in April ordering it to stop making any calls to North Carolinians and pay more than half a million dollars in fines.

    Hess Kennedy and The Consumer Law Center

    Hess Kennedy and The Consumer Law Center claimed to help people reduce their debts by as much as 60 percent. The Attorney General alleged they actually operated an advance fee scam designed to take money from financially-strapped consumers. The defendants rarely negotiated any kind of debt settlement in exchange for the large upfront fees they collected, which were often as much as 15 to 25 percent of a consumer’s total debt. Instead of paying off consumers’ creditors, the defendants kept most of the money even after consumers cancelled the program. A permanent injunction was entered at the end of 2008 preventing the defendants from engaging in any debt settlement or related services in NC. In May, 2009, NC filed a proof of claim for consumer restitution with the Receiver appointed by a FL court.

    Morgan Drexen

    Morgan Drexen represented that it could dramatically reduce consumers’ unsecured debts by negotiating on consumers’ behalf with their creditors to obtain reduced settlements of their debts. The company charged consumers a substantial advance fee for its debt settlement services, which consumers were required to pay prior to receiving any services. In addition, Morgan Drexen represented that attorneys, including a North Carolina licensed attorney, would perform or supervise the debt settlement services rendered for North Carolina consumers. However, consumers had no contact with the North Carolina attorney, or with any attorneys.

    Anquella Davis d/b/a Life Changing Credit Repair Services

    Life Changing Credit Repair Services promised to remove negative items from consumers’ credit reports so they could qualify for home loans and other lines of credit. The company charged consumers $150 to $500 upfront and then failed to repair consumers’ credit or increase their credit scores. The Attorney General won a temporary restraining order and a preliminary injunction in 2008 prohibiting LCCRS from engaging in business in violation of NC law, including prohibiting the company from collecting advance fees for credit repair services. The company has since shut down, and the court issued an entry of default against the defendants in May.

    Federal Debt Relief System

    Cease & desist letter sent to Hollywood, CA debt settlement firm.

    Paradigm Financial and Investments, Inc.

    Cease & desist letter sent to Fullerton, CA debt settlement firm.

    No More Mortgage

    Cease & desist letter sent to Orem, UT debt settlement firm.

    Accelerated Debt Relief

    Cease & desist letter sent to Murphy, TX debt settlement firm.

    Lawgistix, LLC

    Cease & desist letter sent to Miramar Beach, FL debt settlement firm.

    Allegro Law

    Cease & desist letter sent to Prattville, AL debt settlement firm.

    Global Financial Group

    Cease & desist letter sent to Hendersonville, NV debt settlement firm.

    Colonial Financial Solutions

    Cease & desist letter sent to Turnersville, NJ debt settlement firm.

    Aces Credit Solutions

    Cease & desist letter sent to St. Charles, IL debt settlement firm.

    Gloria Diggs

    Cease & desist letter sent to Charlotte, NC credit repair firm.

  • Pennsylvania

    Richard E. Wood d/b/a New Card Services

    Filed suit against defendants for advertising, and taking up-front fees for, credit cards that they never provided.

  • Texas

    BC Credit Solutions LLC
    FH Financial Service
    Four Peaks Financial Services
    DebtORSolution

    Texas Attorney General Greg Abbott charged four debt settlement companies with orchestrating fraudulent debt settlement schemes. The defendants’ Web sites promised that they could eliminate their customers’ unsecured debts – such as credit card accounts – in as little as three years. According to the state’s enforcement action, the defendants unlawfully misrepresented and overstated the nature of their services.

    Credit Solutions of America (CSA)

    Texas Attorney General Greg Abbott today charged Credit Solutions of America, Inc. (CSA) with conducting an unlawful scheme that defrauded Texans with financial problems. According to the state’s enforcement action, CSA purported to offer a debt settlement service that would eliminate its customers’ unsecured debts – such as credit card accounts – in as little as three years. Despite CSA’s promises, a state investigation revealed that the defendant failed to negotiate settlements with creditors for most accounts entered into its program. Further, when CSA did negotiate settlements with creditors, its clients did not always receive the 60 percent reduction they were promised.

    Credit Counseling, Credit Repair, Debt Settlement and Other Scams Are Target of FTC Sweep
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    About Steve Rhode

    Steve Rhode
    Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
    • Shannon Martinez

      I dont know how to go about finding out if World law debt group in Houston Texas is legitament. I have signed up with them for their debt settlement program. Does anyone know anything about this firm?

    • Shannon Martinez

      I dont know how to go about finding out if World law debt group in Houston Texas is legitament. I have signed up with them for their debt settlement program. Does anyone know anything about this firm?

    • Jim D.

      I was scammed by Mezey & Ass. and Campos Chartered “law Firms”. And now I’m scammed twice….Fla didn’t accept my $10K claim only because I postmarked my claim 3 days late. WT*!!!

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