Global Client Solutions, Debt Care USA, and Nationwide Debt Settlement Group were all recently named as defendants in a Oregon class action suit. This now marks the yet another in a growing line of class action suits that name the chain of players as parties. This case names the front end marketer, back office processor and payment facilitator.
The allegation is that the defendants violated the Credit Repair Organizations Act and Oregon Unlawful Trade and Practices Act.
TINA WILLIS AND GARY WILLIS,
DEBT CARE, USA, INC.; NATIONWIDE DEBT SETTLEMENT GROUP, LLC; and GLOBAL CLIENT SOLUTIONS, LLC,
The complaint says:
- Debt Care and Nationwide offer so-called debt negotiation services in exchange for certain fees.
- In early January 2010, plaintiffs sought assistance in resolving outstanding unsecured debts that they owed to various creditors. Plaintiffs learned about Debt Care and Nationwide via the Debt Care and/or Nationwide web sites.
- On or about January 19,2010, a representative of Debt Care and Nationwide sent plaintiffs marketing materials describing thepurported debt negotiation service.
- In those marketing materials, DebtCare and Nationwide represented to plaintiffs that they would immediately contact all of plaintiffs’ unsecured creditors and negotiate settlements of their debts with each ofthose creditors. Debt Care and Nationwide represented that it would typically settle outstanding unsecured debts for60% less than the total amount owed.
- Debt Care and Nationwide also sold, provided,and performed services for plaintiffs and class members for the express and implied purpose of improving a consumer’s credit, and provided advice and assistance to plaintiffs and class members for those same purposes.
Specifically, amongother things, those marketing materials stated:
“With each settlement the creditor will update the clients [sic] credit bureau to reflect a zero balance. Each time this is done it will help to eliminate debt off your credit report, and the amount ofdebt on your credit is 30% of what creates your credit score. Eliminating debt causes your FICO score to repair and rebuild itself. Remember, on-time/late payments are only 35% of what creates your credit!”
- Debt Care and Nationwide made and make similar representations on their websites. For example, Nationwide’s website states that participation in the program can help improve credit scores and increase consumer borrowing power with lenders.
- On or about January 19,2010, Debt Care and Nationwide sent a Debt Negotiation Program Service Agreement to plaintiffs. That agreement purports to require that plaintiffs establish a Special Purpose Account (“SPA”) with defendant GCS. The agreement also purports to require that plaintiffs deposit a pre-determined sum of money into the SPA each month and that defendants would withdraw from the SPA all their fees and pay off all debts that they were able to settle for plaintiffs.
- At that time, defendants also sent plaintiffs an application to open an SPA with defendant GCS (the GCS Agreement) and a document entitled “Payment of Fees to Nationwide Debt Settlement Group.” Those documents purport to describe defendants’ fees, including a monthly fee of $49.85; an “enrollment fee” equaling 5% of the total debt owed; and an “admin fee” of an additional 10% of the total debt owed. In addition, those documents reflect an additional $9 SPA account opening fee, a monthly SPA service charge of $9.85, and various per-transaction SPA fees ranging from $10- $20. Those documents do not describe howdefendants calculated those fees.
- Plaintiffs enrolled in the Debt Negotiation Program Service, and agreed to deposit $1,157.33 each month into an SPA. In or about late January or early February 2010, plaintiffs established an SPA with defendant GCS. GCS’s stated purpose is to assist consumers and debt settlement companies in the debt reduction process, and to assist consumers pay offtheir debts. GCS received money from plaintiffs and classmembers for the purpose of distributing those funds to plaintiffs’ and class members’ creditors.
- On February 9,2010 plaintiffs deposited their first deposit of $1,157.33 into the SPA. That same day, defendants withdrew $1,025.28 in various fees. Over the course of the following months, that same pattern continued: as plaintiffs deposited their monthly deposit into the SPA, defendants continued to withdraw various fees, without regard to whether defendants successfully settled any of plaintiffs’ debts.
- Defendants charged fees to plaintiffs and class members before settling plaintiffs’ and class members’ outstanding debts.
- On or about January 14,2011, plaintiffs contacted defendants and demanded that defendants close their account and return the fees charged. Defendants refused to return the fees.
- Defendants were not registeredwith the Oregon Departmentof Consumerand Business Services at any time relevant to this lawsuit.
The complaint was filed by:
Steve D. Larson
Joshua L. Ross
STOLL STOLL BERNE LOKTING & SHLACHTER P.C.
209 SW Oak Street, 5th Floor
Portland, OR 97204
Telephone: (503) 227-1600
Facsimile: (503) 227-6840
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