Lawsuit filed in Maine against Texas debt settlement company
AUGUSTA, Maine (Legal Newsline) - A lawsuit has been filed by Maine Attorney General Janet Mills against an unlicensed Texas debt settlement company and its president for alleged unfair and deceptive trade practices in the marketing and provision of debt settlement services.
Mills' lawsuit against Credit Solutions of America, Inc., and Douglas Van Arsdale, its president, alleges that CSA's deceptive and unfair practices in marketing debt settlement services violated the law. The lawsuit also alleges that the company failed to register as a debt management service.
"Whether we are in steady financial times or uncertain ones, debt management service providers must operate in a lawful and responsible manner," Mills said. "We will use every tool that we have to protect consumers from illegal business practices that sink vulnerable consumers deeper into debt."
Consumers were required by CSA contracts to pay upfront fees before their debt would be settled. Many consumers were found to have paid CSA in full months before CSA settled their debts.
Consumers were also told to stop talking to their creditors and refer all communications to CSA, which then frequently failed to respond to consumers' inquiries about CSA's communications with creditors, Mills says.
As a result of CSA's practices, many consumers dropped out before their debts were settled after finding themselves worse off financially than before as a result of higher account balances from rising interest rates, penalty charges for missed payments, poor credit ratings and lawsuits brought by creditors, Mills says.
"Maine consumers face difficult financial challenges in these hard economic times. In looking for solutions to large debt, they should not be deceived and exploited by companies who prey on their misfortunes and provide no real assistance." Mills said.
Debt management services must also register with the Superintendent of the Bureau of Consumer Credit Protection and procure a $50,000 surety bond for the protection of consumers under Maine's Debt Management Services Act. CSA was found to have never registered and operated with no surety bond.
Additionally, debt management service providers are prohibited by Maine law from charging more than a $75 set-up fee and more than 15 percent of the amount by which the consumer's debt is reduced as part of each settlement. CSA charges 15 percent of the consumers total debt, costing Maine consumers thousands of dollars.