MINNEAPOLIS (Legal Newsline) - Minnesota Attorney General Lori Swanson has filed lawsuits against three out-of-state debt relief companies over allegations the businesses violated Consumer Debt Fraud laws.
The lawsuits were filed against Washington-based Priority Direct Marketing, Florida-based Clear Financial Solutions and Moneyworks LLC, which operates out of Georgia.
All three businesses had been charging consumers in excess of $1,000 in exchange for helping them lower the interest rates on their credit cards, but none of the service agreements were met, according to Swanson.
According to the lawsuits, the defendants have been targeting consumers through direct mailing, telemarketing calls and other forms of advertisement.
In one instance, Priority Direct informed consumers they were working in conjunction with the federal economic stimulus program.
The lawsuits allege that after consumers paid the upfront fees, the companies often provided no or ineffective services in lowering the interest rates, failed to achieve the promised savings and failed to make the promised refunds to consumers.
"Many people are struggling to keep up with their bills in this tough economy, and a new cottage industry of debt assistance companies promises to help them. But these companies often do little or nothing to justify their high fees, leaving people in even worse shape," Swanson said.
In recent weeks, Swanson has been warning consumers of the ongoing threat of consumer debt scams that seek to take advantage of individuals making credit card payments.
"These companies charged cash-strapped citizens a lot of money to lower the interest rates on their credit cards, but then often failed to deliver on their promises," Swanson said.
The State is suing to seek injunctive relief, impose civil penalties and obtain restitution for victims.