If you feel that a debt reduction service did not do what they promised and or you feel you were treated unfairly please read this article.
FTC Creates Hotline for Consumers Scammed By Debt Reduction Services
By James Comtois
After charging four companies for scamming consumers with false promises of debt reduction, the Federal Trade Commission, which helps consumers to prevent fraudulent, deceptive and unfair business practices and to provide information to help spot, stop and avoid them, has created a consumer hotline for consumers who purchased "debt reduction services" from Edge Solutions, Money Cares, the Debt Settlement Company, the Debt Elimination Center and Pay Help Inc.
The hotline is in addition to a letter that was recently sent to the customers of Edge Solutions and the other companies, notifying them that the companies were shutdown.
In October, the FTC charged the four previously mentioned companies and their principals, Miriam and Robert Lovinger, with deceptively marketing a "debt settlement" operation that allegedly failed to provide services of reducing consumers' debt, resulting in even more debt for many consumers.
According to the FTC's complaint, since at least 2000 the defendants have sold debt settlement services through the websites
http://www.idebthelp.com,
http://www.moneycares.com,
http://www.edgesolutions.com and
http://www.ontrackmpower.com, offering a "Debt Meltdown Program" they describe as "an aggressive method of helping consumers out of the debt trap and away from the bankruptcy path."
The companies claimed they would negotiate with creditors to enable consumers "to escape debt at a fraction of the total amount they owe." However, FTC's complaint alleged that consumers who call the defendants' toll-free number were told that the defendants would obtain settlements that would substantially reduce their debt.
The defendants allegedly promised to negotiate with creditors and begin making payments to them within several weeks after consumers joined their program and to provide personalized financial counseling.
As noted in the complaint, consumers were allegedly told to set up a direct debit from their checking account for deposit into a bank account established by the defendants, who will debit their fees and pay creditors. They were also told to have no further contact with their creditors and to stop paying them immediately, enabling the defendants to negotiate for them.
The defendants allegedly often failed to contact each creditor as promised and consumers often continued hearing from creditors about their debts.
According to the complaint, in some instances the defendants failed to negotiate settlements with all of consumers' creditors and didn't pay them, resulting in wage garnishment or debt collection agency action. When consumers told the defendants that they had received a creditor's summons, they were allegedly told not to worry, because it was just a "scare tactic." In some instances, the complaint states, creditors sued these consumers, who had to pay the cost of the creditors' litigation.
The complaint alleged that, as a result of being in the defendants' program, many consumers experienced substantially increased debt because of late fees, finance charges and overdraft charges and suffered damage to their credit rating because of significant negative information such as late payments, charge-offs, collections and garnishments, all of which may appear on their credit report for up to seven years.
The defendants are charged with violating the FTC Act by allegedly misrepresenting that consumers who purchase their services will be able to pay off all of their debts referred to the defendants' program for a substantially reduced amount, that the defendants will negotiate settlements with creditors and begin paying them within several weeks after consumers join the program and that they will provide one-on-one financial consulting.
On October 4, the court held a hearing requiring the defendants to show cause why a temporary restraining order barring misrepresentations, appointing a temporary receiver and freezing the assets of Edge Solutions of Delaware, Edge Solutions of New York and Money Cares, all a.k.a. The Debt Settlement Company or a.k.a. The Debt Elimination Center; Pay Help, Inc.; and Miriam Lovinger and Robert Lovinger should not be entered. The FTC will seek to permanently bar the defendants from further violations and make them forfeit their ill-gotten gains.
By a 5-0 vote, the FTC approved the filing of the complaint in the U.S. District Court for the Eastern District of New York, which occurred on October 1.
Consumers who call the FTC's hotline at (202) 326-2998 will be advised that on October 11, the FTC obtained a restraining order against these companies. The order appointed a temporary receiver to be in control of the companies and froze the assets of the companies and their owners.
The companies are now no longer operating, so that automatic withdrawals of monthly fees from consumers' bank accounts have ended. Affected consumers should verify with their financial institution that all automatic debits to any of the companies have ceased.
Consumers are strongly urged to take immediate action on their credit accounts to ensure that they pay any creditors with whom they have a payment plan and to contact any other creditors as soon as possible to arrange payment on their accounts or take other steps to avoid further damage to their credit.
*******************************************************************************
If you are considering refinancing please call me before you call a debt reduction agency. I can consult with you about your refinance situations. Sometimes working with a debt reduction agency first can lower your chances for a refinance so please call me first.
Please call me with all your mortgage needs.
Arnold Cohen
The Mortgage Store
303-488-5435
I'm in your neighborhood.