BUFFALO, N.Y. (Legal Newsline) - A national debt settlement company is barred from doing business in New York until it posts a $500,000 performance bond to protect consumers in the state following a loss in a lawsuit filed by the state Attorney General Andrew Cuomo.
Phoenix-based Nationwide Asset Services, Inc., also faces nearly $200,000 in penalties for defrauding nearly 1,981 New Yorkers who went to the company to negotiate reductions in their personal debt, Cuomo says.
Nationwide and its affiliates, ServiceStar LLP and Universal Debt Reduction, LLC, and its marketer, FGL Clearwater, Inc., doing business as American Debt Arbitration were found to have engaged in fraudulent and deceptive business practices and false advertising. The companies made significant profits through their misleading debt settlement plans that rarely delivered the benefits they promised to consumers.
The Erie County Supreme Court found that the majority of Nationwide customers were promised a reduction in their outstanding debt of between 25-40 percent but never saw the reductions. Only one-third of 1 percent of customers ever received savings while the remainder were burdened with continued harassment and lawsuits by creditors and saw their credit ratings destroyed.
"This company made promises to people who were searching for financial help and trying to turn their lives around," Cuomo said.
"But the promises never came true and, in many cases, New Yorkers were left in worse condition than when they started. Thanks to this ruling, the company has to put its money where its mouth is with a performance bond if it wants to do business in New York."
Nationwide Asset is also required by the court's decision to compute restitution for 180 consumers who completed the company's program successfully but paid more in fees and settlements than the amount originally due on their debts. The specific amounts of restitution computed will then be verified by the court and Cuomo.
Cuomo's office, in a broad investigation into the debt settlement business, has found that debt settlement businesses often mislead consumers about the nature of their services, he says.
Cuomo, as part of his investigation into the debt settlement industry, has subpoenaed multiple debt settlement companies and affiliated businesses.