NY Attorney General Wins $200,000 Suit Against Debt Settlement Firm
In his ongoing probe of the debt collection and settlement industries, New York AG Cuomo gets a $200,000 ruling against a debt settlement firm that did not help its customers in the way it promised.
New York Attorney General Andrew Cuomo Thursday announced that his office has won a lawsuit against a national debt settlement company that bars the company from doing business in the state unless it posts a $500,000 performance bond to protect consumers. The decision also imposes fines and penalties of about $200,000 on the company.
A lawsuit was filed in May alleging that Phoenix-based Nationwide Asset Services, Inc. (NAS) defrauded consumers in New York who were seeking help with their debts. The judge ruled for the state, finding that 1,981 consumers had been victims of fraud.
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Cuomo said that the decision was the latest development in his probe into debt settlement and collection industries.
The court found that the majority of NAS customers were promised a 25 to 40 percent reduction in their outstanding debt but never saw such reductions. Only one-third of one percent of consumers received such savings. The other customers suffered continued harassment and lawsuits by creditors and debt collectors and had their credit ratings destroyed.
The court’s decision also orders NAS to compute restitution for 180 consumers who successfully completed the program but actually paid more in fees and settlements than the amount originally due on their debts. NAS has been ordered to compute this consumer restitution and the specific amounts will then be verified by the Attorney General’s Office and the court.
The Attorney General’s investigation and suit determined that NAS and its affiliates, ServiceStar LLP and Universal Debt Reduction, LLC, and its marketer, FGL Clearwater, Inc. d/b/a American Debt Arbitration, based in Florida, engaged in fraudulent and deceptive business practices and false advertising and made significant profits by selling misleading debt settlement plans that very rarely delivered the promised benefits to consumers dealing with debt.
“This company made promises to people who were searching for financial help and trying to turn their lives around,” said Attorney General Cuomo in a statement. “But the promises never came true and, in many cases, New Yorkers were left in worse condition than when they started. Thanks to this ruling, the company has to put its money where its mouth is with a performance bond if it wants to do business in New York.”
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Comments
Comment from Anonymous on October 16, 2009 at 10:56AM EST
And the noose tightens on Debt Settlement.
Comment from Brian Musick on October 16, 2009 at 11:22AM EST
Its a little off topic, but with all these suits against the collection industry, and the debt industry in general, I wonder when election year is for cuomo?
Comment from Anonymous on October 16, 2009 at 11:43AM EST
Only one-third of one percent met promised debt reduction...they deserve it!!
There is no magic wand and this is another case of "too good to be true"...consumer beware.
Pay your bills and all will be well...
Comment from DONALD DALY on October 16, 2009 at 11:55AM EST
Outfits like this exist only because of these 1800+ consumers and people like them. Consumers like these 1800+ deserve what they end up with. Tax $$$ pay for all this activity by Mr Cuomo and his staff, and I'll bet these 1800+ are not contributing much to that pot. These 1800+ have many responsible options but are simply looking for a way to cheat the system but when their plan backfires and they end up with the short stick the rest of us have to pay for their relief, again!
Comment from Anonymous on October 16, 2009 at 1:50PM EST
It's a matter of transparency. Nas and the likes are promising something they can't 100 % deliver. There are Great DS firms just like there are great CA's. It's unfortunate a few bad apples spoil the lot.
Comment from Will Wiles on October 17, 2009 at 3:10AM EST
One of the important issues here may be in the promises the consumers received when the debt settlement lead was generated.
While everyone is reponsible for their own debts, legitimate debt settlement is an important alternative to bankruptcy.
A few bad examples more in each category of the debt business will surely cause the goverment to regulate every aspect beyond anything we have seen thus far. It simple clean up our own industry or somebody else will.