Mac News: Financial Services: Debt Settlement Firm Penalized for Customer Fraud

Debt Settlement Firm Penalized for Customer Fraud

AP
10/16/09 9:23 AM PT

Customers overwhelmed by credit card debt often turn to debt settlement companies as a way to resolve their financial problems and avoid bankruptcy. One of these firms, Nationwide Asset Services, was ordered to pay around $200,000 in penalties for defrauding the customers it had promised to help. New York Attorney General Andrew Cuomo has called debt settlement a "renegade industry."

An Arizona-based debt settlement company accused in a lawsuit of preying on people who can't pay their bills has been ordered to pay nearly US$200,000 in penalties for defrauding customers in New York state.

New York Attorney General Andrew Cuomo launched a nationwide probe last spring into a "renegade industry" of debt settlement businesses.

He accused Nationwide Asset Services of Phoenix, and CSA-Credit Solutions of America of Richardson, Texas, of failing to deliver on promises to consumers seeking to renegotiate personal debts and pay off credit cards.

False Promises

In a ruling disclosed Thursday, Judge Patrick Nemoyer in Buffalo assessed a $198,100 penalty against Nationwide Asset Services for defrauding 1,981 consumers.

He also barred the company from doing business in the state unless it provides a $500,000 performance bond to protect customers.

While the company promised it could reduce outstanding debts by 25 to 40 percent, Cuomo argued that less than 1 percent of its 2,000 New York customers saved that much.

Customers Worse Off

"This company made promises to people who were searching for financial help and trying to turn their lives around," Cuomo said in a statement, "but the promises never came true and, in many cases, New Yorkers were left in worse condition than when they started."

Nationwide Asset Services is still evaluating whether to appeal the decision, attorney Mark Walling said.

The lawsuit against CSA-Credit Solutions has not yet been resolved.

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