RALEIGH, N.C. (Legal Newsline) - North Carolina Attorney General Roy Cooper announced on Tuesday that a Florida law firm that allegedly claimed it would reduce consumers' debts has been banned from doing debt relief work in the state.
Under the terms of a consent judgment approved in Wake County Superior Court, the Consumer Law Group of Boca Raton will pay $600,000 in refunds to North Carolina consumers who paid the company to help them get out of debt. In addition, the company agreed not to collect approximately $600,000 of charges from North Carolina consumers for a total of $1.2 million in consumer savings and refunds.
CLG will also pay $50,000 to the state for costs related to the case.
"Debt relief scams take advantage of struggling consumers, adding to their burden instead of helping them get out of debt," Cooper said. "I'm pleased that we've been able to win money back for these consumers, money that can hopefully help them pay off bills and get on better financial footing."
Under the terms of the agreement, CLG is barred from soliciting, marketing or offering any debt negotiation or debt settlement services in the state. CLG is also prohibited from claiming that its services are performed by attorneys, government sponsored or that it can provide legal representation for consumers.
Cooper filed suit against CLG in October 2010, alleging that more than 650 state residents had paid the firm for debt relief but had gotten little to no help in return. In the state of North Carolina, it is illegal to charge an upfront fee for debt settlement or reduction services.
CLG claimed that the debt adjusting law was unconstitutional and that Cooper had no jurisdiction over the conduct of attorneys. A Superior Court judge rejected those claims. Other companies in the debt relief field have also tried to skirt the law by claiming to be law firms, Cooper says.
Cooper alleged that CLG deceived consumers by promising to cut their debts in half and leave them debt-free without bankruptcy. CLG allegedly rarely worked out agreements to settle debts and kept the massive fees anyway. The company also allegedly misled consumers into believing that its program was affiliated with the government and performed by attorneys when it is not.
"Don't pay an upfront fee for help getting out of debt," Cooper said. "For real help getting your debts under control meet with a qualified non-profit credit counselor in your local community who won't charge you a big fee."