BE CAUTIOUS: Debt settlement company to refund Washington consumers

March 3, 2011

Debt settlement company to refund Washington consumers

Attorney General’s Office argued Freedom Debt Relief’s fees were improper

SEATTLE – Thanks to the Attorney General’s Office, hundreds of cash-strapped Washington consumers who paid Freedom Debt Relief to work out a deal with their credit card providers will be feeling some relief. The California-based company agreed to pay up to nearly $800,000 in restitution to resolve allegations it violated Washington’s Consumer Protection and Debt Adjusting Acts.

“We’re paying special attention to operations that take advantage of people who, due to this tough economy, are already struggling to put food on the table and keep the lights on,” Attorney General Rob McKenna said. “Failing to inform customers that their credit may be ruined and taking illegal fees — when those individuals are making a good-faith effort to settle their debts – are practices that we aim to stop.

Freedom Debt Relief advertises on its Web site that it has settled more than $1 billion in debt for its customers. Under its program, consumers stop making payments to their unsecured creditors and allow those accounts to go into default. Debtors then pay into a bank account they control, which is subsequently used to settle their debts. The company deducts its fees from the account. When sufficient money has accumulated in a consumer’s account, Freedom Debt Relief attempts to negotiate with creditors to settle the debts for a fraction of the balance.

About 1,100 Washington consumers who collectively owed $35 million in debt enrolled in the program since Freedom Debt Relief started operating in 2003. The Attorney General’s Office estimated that more than 570 of those consumers are eligible restitution under the state’s settlement.

“We believe hundreds of Freedom Debt Relief customers paid more fees than allowed under Washington’s law,” said Assistant Attorney General Bob Lipson. “Although the company disagrees, it will refund those fees to eligible former and current customers.”

Freedom Debt Relief stopped enrolling Washington residents in March 2009, when a private class-action lawsuit was filed against it. Attorney General Rob McKenna entered an amicus brief in that case, which is still pending in U.S. District Court in Spokane.

Today’s settlement bars Freedom Debt Relief from accepting any new clients in Washington without notifying the Attorney General’s Office, although it may continue to negotiate debt settlements for those currently enrolled in its program.

Washington’s Debt Adjusting Act caps the fee that a debt settlement company may charge at 15 percent of the total enrolled debt. The Washington Attorney General’s Office alleged Freedom Debt Relief sometimes charged consumers more than the state’s Debt Adjusting Act allows, took its fees before the time permitted by the statute and failed to adequately inform some consumers about how the program works.

Freedom Debt Relief denied the states allegations and contends that the Debt Adjusting Act doesn’t apply to its business model. However, as part of the settlement submitted today to King County Superior Court, the company agreed to the restitution program and to comply with certain restrictions on how it conducts business.

Freedom Debt Relief must refund Washington consumers for all fees paid in connection with debts that weren’t settled or aren’t in active negotiation programs — those fees add up to $742,613 or more.

The company will also pay $70,000 to reimburse the state for the costs of the investigation and litigation.

The agreement states that the company cannot suggest that its program is for everyone who might simply wish to reduce their debt, misrepresent any statistics relating to its negotiations on behalf of consumers or withdraw or transfer any funds saved by consumers in their respective accounts. The provision doesn’t prevent the company from receiving fees as allowed by the Debt Adjusting Act from the accounts or entering into settlement negotiations with creditors.

Consumers must authorize any settlement over 50 percent of the debt and be able to quit the program at any time without a penalty.

In the event that the company enrolls new Washington consumers in its program in the future, the settlement requires a number of disclosures to those customers, including:

· That the program is only for people who are already in financial hardship and unable to make their minimum payments.

· That the program assumes consumers will allow their credit accounts to become delinquent and that missing payments will likely have an adverse impact on the consumer’s credit history. And that the decision to stop making payments rests solely with the consumer.

· That they may still accrue interest and late fees.

· That it may take six months or longer before the customer has saved up enough money to allow the company to negotiate a settlement.

· That the company will continue working toward a settlement even if a lawsuit is filed, and that a lawsuit could result in a judgment against the consumer for the full amount owed plus legal costs.

CONSUMER REFUNDS

Washington residents who enrolled in Freedom Debt Relief’s program may be eligible for a full or partial refund of paid fees. Consumers who already received refunds for all paid fees aren’t eligible for additional restitution under this settlement.

The refund program will be handled through a parallel, private class-action lawsuit on behalf of Washington consumers, which is also in the process of settlement. The case is Carlsen et al. v. Freedom Debt Relief, LLC, et al., Case No. CV-09-00055-LRS (E.D. Wash.). Once the court in that case gives approval, eligible consumers will be contacted about the refund process, how much money they are eligible to receive, and how to submit a claim.

Consumers who have questions about the refund program should contact The Scott Law Group in Spokane at 1-888-955-3966. Information is also online at www.thescottlawgroup.com/freedomdebtrelief.

DOCUMENTS

Freedom Debt Relief Complaint

Freedom Debt Relief Consent Decree

Amicus Brief

DEBT HELP

If you are struggling with credit card debt, there are steps you can take to avoid bankruptcy.

· Consult with a legitimate credit counselor who will help you develop a personalized money-management plan.

o The U.S. Department of Justice’s U.S. Trustee Program provides a list of government-approved credit counseling agencies on its Web site at http://www.justice.gov/ust/eo/bapcpa/ccde/index.htm.

o The National Foundation for Consumer Counseling provides a list of member agencies online at www.nfcc.org or call 1-800-388-2227 for a 24-hour automated message with office listings.

o Think carefully before sending money to a credit counseling or repair program that doesn’t have an office in your community. Shop around. Compare a couple of services and get a feel for how they operate.  The credit counselor should spend at least 20 to 30 minutes with you in order to get a complete picture of your finances. Also, be aware that just because an organization says it is “nonprofit” doesn’t guarantee that its services are free or affordable.

· Debt consolidation programs offered by legitimate organizations can be helpful to some consumers. These programs combine your existing debts into a single loan with a lower interest rate. You deposit money each month with the credit counseling organization, which uses your deposits to pay your unsecured debts, like your credit card bills, student loans, and medical bills, according to a payment schedule the counselor develops with you and your creditors. Your creditors may agree to lower your interest rates or waive certain fees if you’re working with a reputable program, but it can still take several years to complete the program.

· Debt negotiation programs claim they can work out a deal with your creditors to lower the amount you owe. These programs can be risky and may have a negative impact on your credit report and, in turn, your ability to be approved for new credit. Additional risks exist if you are unable to save enough money to satisfy your creditors or are successfully sued and your creditors garnish your wages.

· Recent changes to the federal Telemarketing Sales Rule prohibit companies that sell debt relief services over the phone from charging a fee before they settle or reduce your debt.

· Read the Federal Trade Commission’s “Knee Deep in Debt” brochure for more helpful information at http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre19.shtm.

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Media Contact: Kristin Alexander, Media Relations Manager, (206) 464-6432, kalexander@atg.wa.gov

8 Responses

  1. Dear so ans so,

    This is Chase credit cards, we are offering you a credit card as we see your credit is not so good. Credit cards can make your life easier, they are accepted all over the world, soon they will be accepted on Mars tahnks to Vergin Islands airplanes making space travels. So we offer you a credit card at $500 limit, set up fee is 69 dollars, annual account fee is 100 dollars. You can charge these fees right away on your card. Interest rate is 30%. I know it’s a little high but you have bad credit rating and we want to help you get back a good credit score. Everyyear we review your activity on the card and if you keep a high balance and only payy the minimums, this is a good thing for us as we make lots of money off you, of course it’s good for you having a high balance but your credit card will increase and that is good. See we offer this same deal to thousands of others just like you and then we pool the accounts and package them into an ABS and sell those to investors. We give them a good return and cash flow and we get to keep the late fees, overlimit fees, excess interest rate charges, etc. It’s a good deal for everybody around. We get rich cuz there are thousands and thousands of suckers like you accepting our credit cards, investors get nice yields and return of investment and you get to stay in debt forever to us keeping that cash flow going. We are the perfect toll booth for you and we get rich as so does our investors, we all get a piece of the action off of your hard work. Remember, we can change the terms at any time but that is just a minor detail, see that’s why it’s in small print, meaning minor. What say you, join our credit card club, we have many fancy designs, which would you like?

  2. Dear so and so,

    We are the new collection company for original debt Chase $10,000.00. the last collection company which paid $50 for this debt sold us thru a bidding process your debt along with thousands of others. We won and paid $0.001 on the dollar so we paid $10.00 for your debt. We are nice peoples and we have an offer for you, pay now $2000, that is a 80% discount. I don’t think you’ll get a better deal anywhere else. But we understand times may still be difficult for you, so we are offering option 2, pay $500 per month over a 6 month period. Also please note option one carries no additional late fees or interest and neither does option 2, but if you call us and set-up another plan, that may incur interest charges and possible late fees. We are here to help you resolve this matter, may god bless you and your family. And while it has been over 4 years and the statue of limitations has run it’s course, we hope you don’t know this and thus we will keep trying to collect from you. It’s a numbers game you know. So please call or write us to work this out, as that action will reaffirm the debt and we now have a contract with you and then we can sue you, but we probably won’t since it ain’t worth it but it’s cool and fun keeping you on the edge. All of our employees just work for us, they are robocallers, and they think you owe us as well, afterall you borrowed the money from Chase and they wrote it off but we don’t tell our employees that abd you need not concern yourself either.

  3. Dear so ans so, it has been 2 years now and you have not called us or responsed to any of out letters. If you forgot, this is about the Chase $10,000 debt that you defaulted on. And remember we only paid $50 for that debt and in one of our many letters to you we said we would be willing to settle for $2000.oo. Well other suckers like you paid and we made out handsomely, so we are willing to accept only $500 and we call it even. What say you?

    If you don’t call us then we can’t get an agreement from you. You know, sort of like re-affirm the debt. Also, time is running out for us. I see you live in California and the statue of limitions in that banker ruled state is 4 years, so we insist you call us or write us. Maybe we’ll settle for $50 since that is our initial investment. But, you must act now, this is our last offer before we sell your account along with thousands of others just like you to another collection company, and then you’ll have to deal with them, they might not be so nice. What say you?

  4. Dear so and so,

    This our our second letter to you on the debt Chase credit card. We have been calling you daily starting at 9 am every hour on the hour, 6 days a week till 9 pm. So our expenses are starting to incur. But the phone system we use to call you is a ROBOphone and doesn’t cost us much anyways. This letter is an additional 40 cents, actually less cause will bulk mail them out with thousands of other deabeats like you.
    Sp pay up. Never mind the fact that money loan to you via credit card is not really loaned, it’s leveraged, but’s it’s all part of the Federal Reverse System, Reverse meaning money lent to you, but in revers comes back in multiples of the original amount because of interest and late fees. Of course all that interest and late fee charges actuall come from other sucker loans like yours. Because we have so many loans out there nobody can keep track of anything and it is confusing to most people like yourself, a Good American. Hey, we got the rest of the world involved to, see Credit Slave Master and Visa we’ll take your money Cards can be used all over the world. Oh, here’s another thing, if your are travelling the world and land in Egypt and one of those demonstrators steals and uses your credit card, why you are only liable for $50. See, the money lent to you was actually created from nothing so losing it is no big deal, but hey $50 is reasonable for being a fool is using one of these things. So all in all, we are the collection company collecting on your debt.

  5. Dear so and so, we are the collection company for your debt of $10,000 to Chase. While your credit is in default and has been for 6 months now we won’t tell you that Chase wrote-off the debt and sold us your loan and thousands of others just like you thru a bidding process in which we won. We paid $50 for your debt and now we want you to pay us back plus more, lots more. Of course the amount you pay us over 450 is pure profit minus our expenses such as letters, phone calls, staff pay, office lease, etc. So we have a lot to pay for and thus you need to pay us handsomely for something we bought. Our staff have family’s too you know, we have to survive just like you, it is our god given right to make you pay. But of course you might not know that your original debt, which you defaulted on, was paid thru Chase credit card default insurance. But that doesn’t matter because we paid $50 for your debt, so pay up. Call us and we can work something out. If you want us to verify this debt, then you can follow the rules in Fair Debt Collections Practices act, but we know those rules too. So, please send a letter stating you are disputing the debt, but you know you own the money anyways, it’s the right thing to do. The investors that funded your credit card have been paid in full as well so they don’t care, they actually own your debt but you need not concern yourself with that.

  6. Gotta laugh, why do people go thru this worrying about paying their credit card bills, what some moral principle. Hey, it’s one thing to stiff a friend or family member, but if one knows how money is created then they won’t be so worried about it. Hey, in the US Jubilee is seven years.

    http://www.bakersfieldlaw.org/id25.html

    http://en.wikipedia.org/wiki/Jubilee_(Christian)

  7. Hi,
    Last year video of Rally in Tally with April Charney Esq, Matt Weidner Esq., Chip Parker Esq. link :
    http://www.foreclosurehamlet.org/video/foreclosure-rally-in
    Your donation toward this year Rally is greatly appreciated.
    I went to the Rally last year. It was an unforgettable experience. We defeated the Banks last year and we will win again this year with your help.
    If you want me to carry your foreclosure story to Law Makers this year, e-mail to me at ocean11@the-beach.net. I’ll print it out and take it to Tally. You don’t
    have to be Floridian. The Bankster Foreclosure fraud crime is nationwide.

    To donate, Click on Donate/Paypal link. Your money goes directly to the Coordinator of the Rally.
    I donated $100 for the Rally this year. I and my POW 82 years old father will board the Freedom Bus to Tally on March 9 to support
    Matt Weidners Esq. and the group. My 8 years old nephew broke his Piggy Bank and donated $10 because I explained to him the Rally
    action helps to save people homes including his own home and also it is the right thing to do. My neighbor Ira, a handicapped 83 years old Korean War
    Veteran , condo is in foreclosure, donated $20 from his meager vet pension. Chris who lost his job last year, house is in foreclosure donated $10 and so on..

    If you are unable to attend, email me your foreclosure fraud story, I ‘ll print it out and hand deliver it to Law Maker in Tallahasse.
    Ann
    —————————————————————————————————————————————————————————————-
    Fraudclosure | Second Annual RALLY IN TALLY! Participate! Get involved!
    1. Sign up!

    Go to 4closureFraud.org or ForeclosureHamlet.org.

    Click on Donate/Paypal link. The cost to ride the bus is $30/person, please donate a small additional amount if you are able to help defray the costs of the event. Pay an appropriate amount and add note in space available, the names of the persons who will be attending and your city, which we will use to map out the bus route.

    If you are unable to attend, consider donating towards the cost of this event.

    2. Agenda:

    March 8.

    Starting in the late evening in Miami on March 8th, traveling throughout the night on to early morning of the 9th buses will travel up the east & west coasts of FL picking up participants along the way at centrally located rest stops.

    March 9.

    Call now and make appts with your elected representatives! We will meet individually with our legislators in the morning, break for lunch, and then have a mass rally in Waller Park. The Rally will feature foreclosure defense attorneys and activists speaking about timely topics and current/proposed legislation.

    Following the Rally the press will interview individual homeowners.

    Between 5-5:30 the buses will load up and start back, dropping people off along the way.

    March 10.

    Buses drop the final participants off at the Miami point or origin.

    3. What you can do to prepare and participate.

    Make an appointment with your legislators in the morning hours.

    Condense your foreclosure nightmare into succinct talking points, no more than 5-6, max.
    Keep the focus on the fraud: fraudulent promises, fraudulent affidavits and other documents, etc. Make copies of the documents to leave with your lawmakers.

    Make your own signs, with slogans like: Stop/Fight FORECLOSURE Fraud, Restore INTEGRITY to our Courts, DISBAR Attorneys who “practice” FRAUD, Put the Crooks in JAIL, etc.

    Bring money for meals and incidentals, laptops, cell phone chargers.

    Bring a spare shirt/extra clothes and personal items to freshen up.

    Bring friends!

    Put notices on comment boards and Craigs List; contact local foreclosure defense attorneys and invite their clients; write a letter to the editor, etc.

    Forward this to everyone you know.

    The politicians work for US, not the banks!

    Make your voice heard – loud and clear!

    ~

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