North Carolina Banishes Consumer Law Group

Going after fraudulent debt relief companies is often like playing Whack A Mole. You might put one shady operator out of business, but what about all the rest that continue to run advertisements on television, radio and the Internet?

 While the Federal Trade Commission is targeting firms promising consumers relief from tax and credit card burdens, a number of states are also joining in. One of the latest to take action is North Carolina, which has banned a Florida debt relief company from doing business in the states.

 North Carolina Attorney General Roy Cooper says the Consumer Law Group (CLG) has agreed to stop soliciting North Carolina consumers and will not collect any more money from its existing North Carolina customers while Cooper's case against the company continues.

 "Consumers who are trying to pay off their debts deserve real help, not unlawful fees," Cooper said.  "It's good this company has agreed to stop but now they need to pay back the people they've hurt."

 Advance fees

 Under North Carolina law, it's illegal to charge an upfront fee to help you negotiate your debts, also called debt adjusting or debt settlement. Cooper says some companies promising debt relief, including CLG, have tried to get around the law by claiming to be law firms. 

 A North Carolina judge agreed late last week to a consent preliminary injunction in the case against CLG of Boca Raton, Florida.  The Attorney General filed suit against CLG, its managers, Michael L. Metzner, Ran David Barnea and Daniel T. Post and a related company, American Debt Negotiators, Inc. October 1.

 Cooper is asking the court for a permanent ban against CLG's debt relief activities in the state, refunds for North Carolina consumers, cancellation of all contracts, and payment of civil penalties.

 Cooper contends that CLG deceived consumers by promising to reduce their debts by half and leave them debt-free without bankruptcy.  In reality, Cooper says CLG rarely worked out agreements to settle debts but kept substantial fees anyway.  

 The company also allegedly misled consumers to believe that its program is government-affiliated, and claimed that its services are performed by attorneys when they are not.  Metzner is a Florida lawyer but he is not licensed to practice in North Carolina and the company is not a law firm.  

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