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Cooper: Debt management firm collects fees, provides little help

Posted October 4, 2010

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— The state Attorney General's Office has filed suit against a Florida-based firm that authorities contend illegally collects money to settle people's debts.

Seven consumers complained to the state Consumer Protection Division about Consumer Law Group, which pitches its services online and through radio advertisements, telemarketing calls, and local telephone book listings.

Attorney General Roy Cooper said Monday that the company has collected more than $2.6 million for 3,000 North Carolina residents by promising to reduce their debts by half and leave them debt-free without bankruptcy.

Most consumers who’ve paid the company have gotten little or no help settling their debts or working out payment plans with their creditors, Cooper said. The company claims that its services are performed by attorneys when they are not and misleads consumers to believe that its program is government-affiliated, he said.

Consumer Law Group also signs people up for debt management classes and collect fees that exceed what’s allowed under state law, he said.

“Taking advantage of consumers who are trying to pay off their bills is wrong, and it’s also against the law,” Cooper said in a statement.

The state suit seeks a ban on the company's deceptive practices, refunds for North Carolina consumers, cancellation of all contracts, payment of civil penalties and a freeze of the company’s assets.

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  • CarolinianByChoice Oct 4, 2010

    Wow, ncguy & Heather. You two must have been VERY lucky during the recent economic downturn to post sanctimonious comments like that. Some people never thought they would get in the position they have found themselves in. I know people who were VERY careful with their finances but lost their jobs and ended up in similar circumstances. Have either of you ever had to support a family; feed them, keep a roof over their heads, and keep the utilities on, when you have lost your job?

  • UNC1985 Oct 4, 2010

    We went to the state employee's credit union and there is a free, yes free service that is provided to help w/ paying off credit cards. The company is in CA, we recieve no calls from the card companies (all are under the limit now anyway and paid over the minimum of course) and all reduced the percentage rate. You agree to cancel all your cards (very easy!)and they do assist w/ a budget.
    We are also following the Dave Ramsey plan, yes we could have done it ourselves but needed a kick in the pants :)

  • Pseudonym Oct 4, 2010

    Here's how these "companies" work:

    Instead of paying your credit cards, you pay the "debt settlement company" (calling them a "company" is being kind). They will wait 6-9 months to contact your debtors, because normally, debtors won't settle unless it's been at least that long since the last payment was made. In the meantime, the "settlement company" pockets the premiums you pay.

    So, instead of simply trashing your credit, you are out usually roughly $5,000-$8,000. Plus, your credit's trashed. AND, you still get collections calls from the debtor. AND, the "settlement company" doesn't get any better rates or deals than you would if you would have worked with your debtor yourself.

    Any way you slice it, it's a scam.

  • u stand corrected Oct 4, 2010

    Filing bankruptcy is about the only way to get out of a mess unless you can pay all of the debt back.

  • Whatever Geez Oct 4, 2010

    people do get over their head...trust me b/c I'm there. If there are companies out there that do help then point them my way otherwise all ive ever been told is pay the bills...

  • LambeauSouth Oct 4, 2010

    Why even comment, I am glad to hear you all are doing SOOOOOO
    great that you have time to ridicule folks who are trying to pay their bills, regardless of how they got there! I'm mean really, have you ever heard of throwing rocks at glass houses
    Hope you folks never get in their position, because then you might have to thank them for bringing this to the attention of the SAGO (States Attorney Generals Office)

  • u stand corrected Oct 4, 2010

    Everyone does not get in over their heads. Some people can't work due to illness anymore, or they have been laid off. Please be kinder.

  • Heather Oct 4, 2010

    How about not getting in over your head? I don't use credit cards because if we can't afford it outright we don't make the purchase.

  • SomeRandomGuy Oct 4, 2010

    Why did this scam take ONLY 7 complaints but the whole locksmith scam took an investigative report by WRAL to get any action from the AG's office??

  • IzzMad2016 Oct 4, 2010

    This story shouldn't make people think that there aren't good and reputable debt relief companies around, because there are and they do help. Lenders are much more likely to greatly lower interest rates as well as stopping charging interest altogether so long as the agreed upon monthly payments are made.

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