Kroger, debt settlement company reach agreement
SALEM, Ore. (Legal Newsline) - Oregon Attorney General John Kroger has reached an agreement with a Texas-based debt settlement company alleged to have charged high upfront fees and to have encouraged its consumers to stop paying creditors.
According to consumer complaints, Credit Solutions of America, the largest debt settlement company in the country, in addition to charging high upfront fees and encouraging consumers to end payments to creditors, frequently displayed a lack of effort on their behalf, which resulted in litigation and costs levied against consumers.
Credit Solutions of America agreed to the settlement, which will see 800 Oregon consumers who are current clients of the company receive refunds of pre-paid fees proportional to any success the company had in resolving their debt. Additionally, four Oregon consumers will receive a total of approximately $2,600 in restitution.
"CSA's existing Oregon customers may be entitled to a partial refund if they are not satisfied with the service they get," Kroger said.
In addition to restitution, Credit Solutions of America also agreed to not solicit additional clients in Oregon for three years and to complete existing files and withdraw from doing business in the state for three years. CSA in ineligible to apply for or conduct business in Oregon until three years after the date of settlement.
Complaints have been filed against CSA by several other states.
Oregon's new House Bill 2191 protects consumers by prohibiting the charging of up-front fees for debt settlement aid.
The bill limits the amount of fees that a debt settlement company may charge, prevents misleading advertising and requires better disclosures. The new law also requires debt management companies to register with the Department of Consumer and Business Services.