The Vermont Attorney General announced that CreditAnswers, LLC, and Liberty Banc Mortgage Group, Inc. (doing business as Liberty Settlement Group), two companies that offer to negotiate debt settlements for consumers, have entered into settlements with the Attorney General’s Office that will result in refunds and payments to the State totaling over $70,000. In doing so, the businesses—based respectively in Plano, Texas, and Irvine, California—are settling claims that they violated state law by engaging in the business of debt adjustment without a license, and failed to comply with the Vermont Consumer Fraud Act. These are the fifth and sixth settlements between the Attorney General’s Office and debt settlement firms this year.
According to Attorney General William Sorrell, CreditAnswers and Liberty Settlement Group violated the Consumer Fraud Act by not following the state’s three-day right to cancel requirements and by failing to have prior proof to support online claims about the results they could achieve for consumers. CreditAnswers’ site stated that the company’s “team will negotiate with your creditors to reduce your debt by 40 to 60%,” and that debt settlement “generally can be completed in less than 36 months.” Liberty Settlement Group’s site claimed that the company could arrange for consumers to “become debt free within 12-24 months in most cases,” and “eliminate 50%-70% of your unsecured debt.”
CreditAnswers entered into contracts with 9 Vermont consumers and charged up to 15 percent of the dollar amount of the debt placed with the company; Liberty Settlement group entered into contracts with 4 Vermonters and charged 17 percent of the amount of their debt. Under the settlements, CreditAnswers is responsible for paying refunds totaling approximately $13,000, as well as civil penalties and costs in the amount of $30,000; Liberty Settlement Group is responsible for $8,000 in refunds and $20,000 in penalties and costs.
In addition, both companies will pay $2,000 to any Vermonter who was sued by a creditor after signing up with the company, and will offer to complete, without charge, negotiations with the creditors of its Vermont customers. One of the consumers who will be receiving a refund from Liberty Settlement Group is Helena Huva, a resident of South Burlington. Of that company, she said, “They did nothing towards paying my creditors.” As for the settlement, she commented, “That is absolutely wonderful.”