Feds, State AGs Go On Attack Against Debt Settlement & Collection Firms Engaged In Allegedly Fraudulent Activities

From the Office of the Florida Attorney General:

• Attorney General Bill McCollum [last week] announced that a settlement has been reached in a case brought by Chase Card Services against affiliated Hess Kennedy companies which engaged in fraudulent debt settlement activities. Under the settlement approved earlier this week, Chase will release the credit card debt of approximately 13,000 consumers nationwide, including over 900 Florida residents, who contracted with the Hess Kennedy companies for the fraudulent services. Laura Hess and the Hess Kennedy Companies are currently in Receivership as a result of a lawsuit filed by the Attorney General’s Office in February 2008.

For the entire Florida AG press release, see Third Agreement Reached in Hess Kennedy Debt Settlement Case.

------------------------

From the Office of the Texas Attorney General:

• Texas Attorney General Greg Abbott [earlier this month] charged a Houston-based credit repair firm with violating the Texas Deceptive Trade Practices Act. The state’s enforcement action names Jubilee Financial Solutions LP, also known as The Credit Card Solution (TCCS) - a self-proclaimed “debt invalidation” business - its parent company, Jubilee Financial Management LLC, and the companies’ owner, Robert Mitchell Lindsey. [...] Marketing materials obtained by state investigators shows the defendants claimed their “debt invalidation” program can eliminate customers’ debt in as little as 12 to 18 months by relying upon federal consumer protection laws. In videos on the defendants’ Web site, Lindsey claims that TCCS has “gotten rid of $150 million of credit card debt.”

For the entire Texas AG press release, see Texas Attorney General Abbott Charges Houston “Debt Invalidation” Firm with Unlawful Conduct.

For the Texas AG's lawsuit, see State of Texas v. Jubilee Financial Solutions LP, dba The Credit Card Solution, et al.

---------------------

From the Office of the Ohio Attorney General:

• Ohio Attorney General Richard Cordray [last week] filed a lawsuit against Solon-based National Enterprise Systems, Inc. (NES) for harassing Ohioans. The collection agency is accused of using egregious methods in attempts to collect alleged debt from Ohio consumers. "Everyone has the right to be treated fairly under Ohio law, regardless of possible debt owed," Attorney General Cordray said. "More than 200 consumers filed complaints with my office saying NES used threats, harassment and deception to collect debts. These practices are unacceptable and will not be tolerated." [...] The [Ohio AG's] investigation revealed a pattern of illegal practices, such as calling and harassing consumers' coworkers and family members, calling before 8 a.m. and after 9 p.m., using a busive language, attempting to collect debts consumers did not owe, failing to verify debts and making unauthorized withdrawals from consumers' bank accounts.

For the entire Ohio AG press release, see Cordray Takes on Ohio Debt Collector for Harassment.

---------------------

From the Office of the West Virginia Attorney General:

• A Braxton County woman authorized an Ohio collection agency to charge $5,000.00 to her credit card because the company was threatening to have her daughter arrested at work. The same collection agency told the father of a Kanawha County woman that his daughter would be "arrested for fraud of the federal government" unless she made an immediate payment of $5,000.00 toward a student loan. Such strong-arm collection tactics are effective, but much like holding a gun to someone’s head, they are illegal. It is precisely this type of conduct that Attorney General McGraw seeks to stop by filing a lawsuit today against the company that allegedly made these threats to several West Virginians, National Enterprise Systems, Inc. ("NES") of Solon, Ohio. McGraw’s complaint alleged a wide range of other unlawful conduct, including adding unlawful collection fees to tuition owed by students to West Virginia colleges and universities.

For the West Virginia AG press release, see Attorney General McGraw Sues Ohio Collection Agency, National Enterprise Systems; Asks Court to Stop Firm from Making Unlawful Threats.

-------------------

From the Office of the Washington State Attorney General:

• Attorney General Rob McKenna [...] praised the Federal Trade Commission for tackling a Tacoma company that preyed on financially strapped consumers. He urged consumers to take advantage of low-cost credit counseling services. “When you’re drowning in debt, you’re desperate,” McKenna said. “But if you’re not careful, your chosen rescuer may toss you an anvil instead of a life preserver.” [...] Mutual Consolidated Savings in Tacoma was sued by the FTC for allegedly using robo-calls to aggressively target consumers then charging fees of $690 to $899 while providing little help. The FTC froze the assets of the company’s owners. “Mutual Consolidated Savings has been the source of numerous consumer complaints,” McKenna said. “The Federal Trade Commission’s move to shut down its Tacoma call center means that fewer consumers will be misled by the company’s promises to bail them out of debt.”

For the entire Washington State AG press release, see McKenna warns consumers about debt-relief scams (Attorney General praises FTC for shutting down Tacoma company).

---------------------

(1) According to the Florida AG, the lawsuit against Laura Hess was filed by the Attorney General’s Economic Crimes Division and named Hess’s Broward County law firm and several other Florida-based companies she controlled. The lawsuit accused Hess of signing thousands of credit card debtors up for debt management services and claiming the law firm would provide legal services to cancel debts for pennies on the dollar. Representatives of Hess allegedly told consumers that the companies had audited the consumers’ accounts and found numerous violations under the Fair Credit Billing Act, then sent notices to creditors disputing all charges. Consumers were falsely told that once these notices were issued, the consumers did not have to pay creditors and creditors could not sue or otherwise take action against them. This deception led to lawsuits and other actions against several debtors.