In recent years, many companies have popped up calling themselves “debt settlement firms.” In reality, the companies often charge a high up-front fee without providing any real service to already cash-strapped consumers. Florida’s Attorney General Bill McCollum is working hard to stop these companies’ scams.
What Are Debt Settlement Firms Doing Wrong?
These companies promise consumers that they will negotiate with creditors to reduce the consumer’s credit card debt. The catch is that consumers have to pay a high fee before the company will begin work. After the fee comes the real pain; the company fails to significantly reduce the consumer’s debt. This leaves consumers with not only high credit card debt, but a new expense for a service they did not receive.
Florida’s Attorney General describes the problem this way: “Financially strapped Florida consumers are turning to these so-called debt-relief businesses as a last resort to try to regain control of their finances, only to lose more money in excessive up-front fees with little or no relief from their debt.”
What Is AG McCollum Doing to Stop Them?
The Economic Crimes Division of the Attorney General’s office has filed lawsuits against three debt settlement firms: Texas-based Credit Solutions of America, Clearwater-based American Debt Arbitration and Arizona-based Nationwide Asset Services. In all three cases, McCollum has successfully obtained injunctions stopping these companies from charging illegal up-front fees.
When talking about the most recent injunction filed against Credit Solutions of America, McCollum said, “This ruling represents significant progress in reigning in these abusive practices.”
Source: Consumer Affairs.com “Florida Gets Injunction Against Credit Solutions of America” 23 Aug 2010