January 18, 2010
Alyson Rye of West Union, WVa., was alarmed when a telemarketer from Clear Financial Solutions repeatedly badgered her to accept his offer to reduce the interest rates on her credit card debt. He even led her to believe that he had Chase Bank on the line and tried to negotiate an interest rate reduction.
Chase later confirmed that no such call was made.
Although Rye never accepted its offer, Clear Financial Solutions charged $999.00 to her credit card bank, which prompted her to complain to West Virginia's Attorney General McGraw. Her complaint and others prompted an investigation of Clear Financial Solutions of Orlando, Florida.
Because of that probe, McGraw's office has entered into settlement agreements with three companies offering a variety of debt relief services, including Clear Financial Solutions, and its owner, Chris Rubini, Financial Freedom of America, Inc. of Dallas, Texas, and Financial Solutions Legal Center, of West Palm Beach, Florida.
Collectively, the settlements will result in cash refunds of more than $214,000 to 226 West Virginia consumers. All three companies also agreed to discontinue providing debt relief services in West Virginia in the future.
McGraw said Clear Financial Solutions offered a service known as "debt negotiation," in which consumers are promised a reduction in interest on their credit card debt for a one-time fee that ranges from one to two thousand dollars. Debt negotiation companies claim they try to generate savings by arranging balance transfers on new credit cards. Many consumers report that no services are provided.
In contrast, Financial Freedom of America and Financial Solutions Legal Center offered a service known as "debt settlement." In this approach, consumers stop making payments to the credit card banks and try to accumulate savings in an account that the debt settlement company will use to negotiate lump sum settlements of less than the amount owed on each account.
Most debt settlement companies charge substantial upfront fees, monthly service fees, and additional contingency fees based upon a percentage of the amount allegedly saved by a settlement. Consumers frequently complain that debt settlement companies settle few, if any, accounts, that they continue to receive calls from debt collectors, and are often sued by their creditors while they were enrolled in this program.
"Consumers who seek help with financial problems on the Internet or from high pressure telemarketers are more likely to find trouble rather than a solution to their problems," McGraw said.
