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TALLAHASSEE, FL – Attorney General Bill McCollum today unveiled his office’s latest consumer protection initiative in the form of a coordinated enforcement effort targeting potentially improper tactics in Florida’s debt relief industry. In a statewide initiative, the Attorney General’s Economic Crimes Division has taken legal action against five companies and opened formal investigations into the practices of an additional five companies, all of which were purportedly offering debt relief services including credit counseling, credit repair, debt management, and credit card rate reduction services.
“As more Floridians facing financial difficulties are turning to debt relief organizations for help, an increasing number of these companies are taking advantage of the nationwide financial situation and defrauding consumers,” said Attorney General McCollum. “Our efforts will send a message to this industry that preying on consumers in financial distress will not be tolerated.”
The statewide initiative was launched in response to the growing number of consumer complaints regarding the debt relief industry. To date this year, the Attorney General’s office has received more than 1,400 debt relief-related complaints, which represents a 62-percent increase from the previous year. Complaints allege that certain companies promise services and savings that they don’t provide, refuse to make refunds, and often leave the consumer worse off financially than they were when they signed on.
Consumer advocacy groups recommend that consumers with mounting debts try first to resolve their financial problems themselves, before seeking the assistance of a debt relief organization.
“Many times a collection agency will settle for a lower payment, and even eliminate late fees and penalties if a consumer tries to negotiate their debt. This may leave a blemish on a consumer’s credit report, but it's one of several ways to stop the downward spiral into deep debt,” said Brad Ashwell, a consumer advocate for the Florida Public Interest Research Group. “However, fraudulent practices can devastate consumers already suffering from debt and I commend the Attorney General’s aggressive actions against these harmful practices.”
The following legal actions were announced today:
Lawsuit filed against IXE Accelerated Financial Services
The Attorney General’s Economic Crimes Division filed a lawsuit against an Orlando-based company accused of making misleading promises regarding credit card rate reduction services. IXE Accelerated Financial Services (IXE) allegedly offered credit card rate reduction and credit counseling services to consumers primarily through telephone solicitations and collected fees from consumers, but never provided the services.
Lawsuit filed against Enterprise Technology Group, Inc.
A second lawsuit was filed against Dunedin-based Enterprise Technology Group, Inc., doing business as Ameritrust Financial Card. The lawsuit states Ameritrust charged enrollment fees for a credit card that the company promised would operate like a normal credit card while improving the consumers' credit score through Ameritrust’s monthly reporting. In reality, Ameritrust’s cards were usable only on Ameritrust’s online catalog and the company allegedly never reported consumers’ accounts to any credit bureau.
Pending litigation against two Jacksonville companies
The Economic Crimes Division is also currently in litigation against two Jacksonville-based companies. United Debt Solutions, Inc., allegedly offers to assist consumers in negotiating settlements and paying off debts, but fails to do so and makes unauthorized withdrawals from consumers' bank accounts. The Attorney General’s Office has also obtained a default judgment against the corporate defendants from Provident Financial Services, Inc., also known as Future Financial Direct, Inc. Provident was allegedly failing to negotiate, reduce, and consolidate consumer's debt as promised. Litigation is ongoing against the company’s principal owners, Curtis Wood and Ryan Boyd. The default judgment was reached in July.
Settlement reached with New Leaf Associates, LLC
The Attorney General’s Office reached a settlement with multiple defendants named in a Pinellas County lawsuit that involved a “debt elimination” scheme operating under the name of New Leaf Associates, LLC. New Leaf victimized thousands of consumers nationwide by promising consumers there was a secret “legal administrative process” to completely eliminate debt and improve credit scores in the process. The Attorney General obtained an injunction to stop the operation of the scheme, but has been litigating to obtain a return of the funds to the consumers. The settlements with 16 defendants prohibit the defendants from participating in or marketing any similar scheme and require payments of costs and fees and restitution for Florida victims amounting to approximately $320,000 and additional settlement negotiations are ongoing with other defendants.
Subpoenas have been served against other debt relief organizations including Financial Freedom Resources, Inc., of Clearwater; Specialized Funding, of Largo; United Debt Solutions, ADA Tampa Bay, also known as American Debt Arbitration, of Tampa; Nodelay Enterprises, Inc., also known as Nodelay Account Services, of Orlando; and Equity First Financial Corp., of Casselberry.
Companies examined in conjunction with this initiative are suspected of violating Florida’s Deceptive and Unfair Trade Practices Act along with other laws regulating telephone solicitations, telemarketing, credit counseling organizations, and credit service organizations. While the exact practices of each company vary, most of them allegedly charge consumers illegal up-front fees, fail to provide consumers with written contracts and refunds as required by law, and regularly misrepresent the nature and benefits of their services. There are a total of 31 debt relief organizations currently under review for potentially misleading or deceptive practices.
Many debt relief services do provide legitimate services and can help consumers reduce the negative effects of debt. Consumers should exercise caution when selecting a debt relief program. Information for consumers who may be seeking debt relief services is available online at: http://myfloridalegal.com.
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