Consumer Law Group, a company that promises consumers it can help get them out of debt, has been sued by North Carolina's attorney general, who wants to stop it from collecting money from customers and issue refunds instead.
In the suit, the attorney general alleges that the Boca Raton, Florida-based Consumer Law Group offered debt settlement schemes to more than 650 North Carolina consumers and charged them upfront fees, which is prohibited under state law.
Calling it a "classic advance fee scam," the suit alleges that consumers who enrolled in the company's debt settlement program were required to provide their bank account number and authorize monthly debits -- ranging from $100 to nearly $1,700 -- from their accounts. Customers were told their monthly payments would be placed in an escrow account.
Consumers were promised their debts would be cut in half and that they would be debt-free without having to file for bankruptcy. The company has collected more than $2.6 million from North Carolina residents, but only a fraction of that has been paid out to creditors, according to the suit.
Other allegations include claims that the company used deceptive soliciting tactics. For example, the company solicited customers through Internet pop-up ads and a website called North Carolina Relief Act. It told customers they could receive credit relief through the "State of North Carolina Relief Program" which doesn't exist. Also misleading was the suggestion that the company's program was affiliated with the government by posting seals of the Federal Trade Commission and Social Security Administration on its web site.
The suit also says that the company misrepresents its services by claiming that attorneys are the ones that handle the work. The attorney general contends that the company mostly employs telemarketers who make the debt settlement pitches, not attorneys. Michael L. Metzner, who is listed as the managing principal of the company, is a Florida lawyer but not licensed to practice in North Carolina, according to the suit.
The attorney general also contends that a number of business with names like American Credit Counseling, Inc. and American Debt Negotiators are located at the same address as Consumer Law Group. The suit alleges that the company regularly markets its services through third-party "referral agents" to enroll customers and refer them to debt management programs operated by other entities incorporated as non-profit corporations.
A call placed by Consumer Ally to Consumer Law Group has not been returned.
"If you need help digging out of debt, don't get trapped in a scam that puts you deeper in the hole," Attorney General Roy Cooper said in a statement. "Find a non-profit credit counselor in your community who can offer real help instead."
The National Foundation for Credit Counseling is a good resource for consumers looking for an accredited, non-profit credit counselor. You can also call 1-800-338-2227.
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