May 5, 2009
-
News: Debt Relief USA 2nd in Suit by IL
A debt settlement firm based in Addison, Texas, has become the second target of Illinois State Attorney General, Lisa Madigan, as she rises to the defense of Illinois state residents who have fallen victim of the Texas firm. Ms. Madigan filed a lawsuit against Debt Relief USA, Inc. and its President, Kelly E. Reilly. The suit alleges that the firm pledged consumers that they would help reduce their credit card debt by 40 to 60 percent and assured them they could be debt-free in less than three years. The complaint alleges that Debt Relief USA did not deliver as promised. In most cases, the firm did not reduce the consumer’s credit card debt by any significant amount. The complaint goes on to say that most of the Illinois consumers opted out of the program before any credit card debt reduction settlements were negotiated resulting in the loss of large nonrefundable fees paid to Debt Relief USA.
More than 470 Illinois residents enrolled in Debt Relief USA’s program. Consumers were instructed by Debt Relief USA to stop making credit card payments. The firm pro-rated an amount based on the consumer’s debt and then instructed them to send that amount to Debt Relief. The company would then apply the first several payments toward a fee of up to 10%. The firm would also charge the customer a maintenance fee of $29.95 to $39.95 a month. The balance of the payment would then be deposited in an account until sufficient amount is reached to make a debt settlement. While the consumer continues to pay Debt Relief USA these large fees, the lawsuit alleges the firm does nothing to further negotiations in lowering the consumer’s credit card debt. Furthermore, when Debt Relief USA did make any settlement, they charged the consumer a whopping 13% settlement fee.
Debt Relief USA is charged with violating the Illinois Consumer Fraud and Deceptive Business Practices Act by misrepresenting themselves and their services. The complaint asks for a permanent injunction barring the defendants from engaging in any credit card or debt settlement business in Illinois. It also asks for restitution for all consumers violated, civil penalties of $50,000, and an additional $50,000 for each violation committed with the intent to defraud.