NoteWorld Involved in Georgia Class Action Case on Debt Adjusting. Raises Bigger Issues.

It seems the issues surrounding if payment processors in the debt settlement world is getting more complicated.

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This recent class action case is out of Georgia against NoteWorld and Noteworld Servicing Center; Hattie Burke v. NoteWorld. It appears that NoteWorld gets sucked in not because of their actions but because of the actions of who they decided to provide services for. And certainly Global Client Solutions has had their recent share of legal issues over relationships with their client companies as well.

The following excerpts come from the allegations in the actual case so you can read the perceptions of some when it comes to the role the payment processor may play in the debt relief relationship.

I’d like to hear from you. How do payment processors like NoteWorld or Global Client Solutions best protect themselves and their other company clients in situations like this? Do they become experts in the rules of all states and screen member company contracts and marketing?

What do you think the answers are?

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  • Defendant is in the business of providing “Debt Adjusting” services to Georgia consumers as that term is defined by O.C.G.A. § 18-5-1. 16. Defendant is not exempt from the requirements of the GDAA.
  • Plaintiff and the proposed Plaintiff Class Members are residents of the State of Georgia who received debt adjusting services from the Defendant.
  • NoteWorld participates as part of an interrelated collection of companies and individuals that act in concert in the business of providing programs of debt adjusting, debt settlement, and/or debt management services (hereinafter collectively referred to as “debt adjusting programs”) to residents of the State of Georgia.
  • NoteWorid “collects, processes, and disburses payments” from Georgia residents as an essential part of the debt adjusting programs. The debt adjusting programs claim to analyze the debtor’s financial situation, negotiate with creditors to lower interest rates and principal amounts owed, and ultimately resolve debts on behalf of Georgia residents.
  • On information and belief, NoteWorld provides debt adjusting programs in conjunction with at least 100 entities. NoteWorld performs an integral part of each of these debt adjusting programs by providing transaction management and processing services as part of a comprehensive debt adjusting plan.
  • Plaintiff Burke participated in a debt adjusting program offered by Defendant in conjunction with a debt adjusting company known as Safe Trust Financial, Inc., f/Ida LifeGuard Financial a/Ida Global Logistics Enterprises a/Ida U.S. Debt Associates (hereinafter “Safe Trust”). Safe Trust was incorporated on September 3, 2009, and filed a petition for bankruptcy protection on February 7, 2011.
  • On information and belief, additional “front-end” debt adjusting companies with whom NoteWorld has partnered, as presently known, include Accredited Financial Corporation, Amber Network Inc., Best Debt Options, Beyond Financial Service, Brite Credit Inc. (d/b/a Brite Credit 123), Century Negotiations Inc., Clear Debt Solution, Coastal Debt Solutions, Counsumerwise Debt Solutions, Counsel 4 Debt Relief, Countrywide Debt Solutions Inc., Credit Care Corporation, CreditCarePro, Debt Help Center USA, Debt National Relief, Debt Reinvestment, Debt Solutions, DebtErase lnc, Debt Pointer, DebtPro, DTS Financial Group, E.A.C. Financial, FBL Associates, Freedom Debt Solutions, Help Settle, Helpsettle.com, Innovative Debt Solutions, Lifeguard Financial, Maximum Debt Solutions, Morgan Stevens Financial Solutions Company, National Financial Freedom, Nationwide Consumer Advocacy Group, On Track Financial, Personal Debt Systems of America, Princeton Debt Management, Reduce My Debt, Settle A Debt, Settlement Corporation of America, SilverLeaf Debt Solutions, The Debt Answer, The Debt Cure, US Consumer Support, Vision Debt.com, and World Debt Solutions.
  • “Front-end” companies, such as Safe Trust, contact consumers through marketing schemes offering debt adjusting services to consumers who have credit card debt or other unsecured debt.
  • NoteWorld, in partnership with various companies, executes the “back-end” debt adjusting services for consumers who have been successfully enrolled in debt adjusting programs by “front-end” debt adjusting companies such as Solve Debts and Safe Trust.
  • NoteWorld and Safe Trust acted jointly as a debt adjusting enterprise. Together she engaged in debt adjusting on behalf of the Plaintiff for a fee pursuant to a contract.
  • NoteWorld specifically engages in debt adjusting programs through standardized contracts with Georgia residents. The consumer is required to enter into an agreement with a “front-end” company, in addition to a “Sign-Up Agreement” with NoteWorld.
  • In consideration for program fees paid by the consumer, NoteWorld creates and administers a debt adjusting account to carry out the debt adjusting program as marketed by the “front-end” company. NoteWorld is authorized to automatically transfer monthly payments from the consumers’ private bank account and into the debt adjusting account. The debt adjusting account purportedly accumulates funds to pay settlements with the consumers’ creditors. NoteWorld then debits the consumers’ debt adjusting account to pay for the fees charged by itself and the other debt adjusting companies. NoteWorld thus acts as the conduit for all payments and monetary transfers related to the debt adjusting programs.
  • On information and belief, at all times related to the allegations in this Complaint, NoteWorld was acting as an agent, co-conspirator or in ajoint venture with Solve Debts and Safe Trust in all dealings with the Plaintiff.
  • On information and belief, NoteWorld is affiliated with other entities with whom the front-end debt adjusting companies also provide payment to perform services for the debt adjusting programs.
  • Defendant is not regulated and supervised by the Office of the Comptroller of the Currency, the Office of Thrift Supervision, the Federal Reserve, the Federal Deposit Insurance Corporation, the National Credit Union Administration, or the Georgia Department of Banking and Finance.
  • Defendant is not a bank, bank holding company, trust company, savings and loan association, credit union, credit card bank, or savings bank.
  • Plaintiff and Plaintiff Class Members were contacted through a telephone solicitation, internet solicitation and/or television advertising scheme employed to target consumers in the State of Georgia with personal financial troubles.
  • Plaintiff and Plaintiff Class Members entered into agreements with Defendant to pay a fee for debt adjusting services.
  • At the time of the solicitation, Plaintiff had incurred personal debt obligations in the amount of approximately $50,000, which she sought to be resolved.
  • Defendant debited from Plaintiff Burke’s bank account $800 per month for 7 months for a total of $4,200 for services associated with the debt adjusting program. Of the money withdrawn from Plaintiff’s account, Defendant maintained that at least $3400 was the program ‘Tee” accepted for the proposed services.
  • Defendant did not disburse any portion of this money to the Plaintiff’s creditors, and it held Plaintiff’s funds in excess of thirty (30) days.
  • The money accepted by Defendant from Plaintiff exceeded 7.5 percent of the amount paid monthly by Plaintiff for distribution to her creditors.
  • Defendant did not negotiate the resolution of any of the Plaintiff’s credit accounts.
  • The debt adjusting programs through which NoteWorld charges fees to Georgia residents is largely a scheme to swindle money from consumers on the promise that a debt adjusting program will be able to resolve their debts for pennies on the dollar. In actual practice, these debt adjusting programs charge exorbitant up-front fees, perform little or no service for the debtors, and subject the debtors to increases in their debts, lawsuits, and garnishments that might otherwise have been avoided.
  • NoteWorld is the backbone of the illegal debt adjusting industry and it facilities the unlawful conduct at issue in this case. Its contribution to the debt adjusting scheme is to provide payment processing, accounting, website interface, ACH transfers, and account reporting necessary to facilitate the debt adjusting scheme. Using NoteWorld’s system, a “debt settlement” company needs only a telephone to solicit funds from Georgia residents.
  • The front-end companies that partner with NoteWorld regularly change names, dissolve, file for bankruptcy protection and otherwise evade legal pursuits by their clients who receive virtually no services for the fees she pay.

You can 05711462404.

This case was filed by:
David Hudson and Christopher Cosper
Hull Barrett, PC
PO Box 1564
Augusta, GA 30903

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