October 21, 2009
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News: FL Atty Gen Sues Debt Settlement Firms
Attorney General Bill McCollum has taken charge of an industry that has been preying on the misfortune of credit card customers. McCollum's office announced that the filing of two lawsuits against companies who have abused the already down trodden credit card sector through unfair and deceptive practices. Texas based Credit Solutions of America and American Debt Arbitration (ADA) Tampa Bay a Clearwater, Florida company are the two of the five credit card debt settlement companies named in the suits. The Attorney General's Office is currently investigating 140 complaints related to the deceptive practices of Credit Solutions but believe the number of Florida victims alone could be in the thousands.
According to reports, ADA Tampa Bay, a telemarketing firm, contacted individuals over the phone and made promises in assisting consumer reduce the amount of debt owned on credit cards but failed to meet those obligations. Both companies, Credit Solutions and ADA Tampa Bay set up special accounts for clients and instructed them to stop paying their credit card bills and deposit the funds into the account to be later used to leverage negotiations with lenders. However, both companies withdrew monthly fees from the accounts which in some cases amounted to nearly 85 percent of the deposits leaving little money left for negotiations.
In a release to FOX 13 News, Doug Van Arsdale, CEO of Credit Solutions of America, stated that the complaints are merely a misunderstanding and that the company has provided help for consumers who have become "overwhelmed" by debt. However, the Attorney General maintains that the companies were not paying off any debt. McCollum also noted that Florida residents are struggling more than other states and rank second in the nation for credit card defaults. Attorney General McCollum encouraged consumers who are in need of assistance in dealing with debit should contact their creditor and ask them work with them directly. If all else fails, consumers should seek the assistance of a reputable credit counseling agency or an attorney.