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Integrated Credit Solutions Settles Massachusetts Charges for $600,000

May 11, 2004
Massachusetts consumers who paid upfront fees to a Florida-based telemarketer for a referral to a credit counseling agency will receive a refund of between $200 and $500, under the terms of a settlement announced by Massachusetts Attorney General Tom Reilly.

The U.S. District Court settlement stems from a December 2002 lawsuit alleging that sales representatives from Integrated Credit Solutions, Inc., of Fargo, Florida, gave false and misleading information about benefits and savings to lure consumers into purchasing credit counseling services.

Reilly's settlement requires ICS to pay more than $600,000 in restitution to an estimated 2,600 Massachusetts consumers who purchased credit counseling services through ICS in alleged violation of both state consumer laws and federal telemarketing laws.

"This case illustrates how important it is for consumers to shop around and ask questions before signing on with a credit counseling agency," Reilly said. "I urge consumers to carefully weigh the pros and cons before enlisting the services of an agency that may just add to their financial woes."

In 2001 and early 2002, ICS sent tens of thousands of pre-recorded messages to answering machines in the Commonwealth, promising lower interest rates and substantial savings for consumers with credit card debt. ICS telemarketers claimed that consumers would save significant amounts of money by using the help of a credit counselor, AG Reilly alleged in his original complaint. Those promised savings, however, were significantly diminished after monthly charges of $35 or more and an upfront "enrollment" fee of between $200 and $500 per consumer.

Under the terms of the settlement, ICS will pay $400,000 to AG Reilly's Office to refund an estimated 2,000 Massachusetts consumers who paid ICS to enroll in credit counseling services and have since ended their dealings with the agency.

For those consumers still enrolled in credit counseling, ICS will directly return the upfront fee when consumers terminate services or finish their debt management program. Those refunds paid directly by ICS are expected to provide at least an additional $200,000 or more in restitution to Massachusetts consumers. ICS will also pay a $50,000 civil penalty to the Commonwealth, bringing the total dollar value of the settlement to more than $650,000.

ICS is now prohibited from collecting upfront fees from consumers and from using pre-recorded messages that solicit any money payable to ICS. AG Reilly alleged earlier that the for-profit company used pre-recorded messages to solicit money for itself in violation of the federal Telephone Consumer Protection Act (TCPA), which prohibits commercial use of pre-recorded messages. ICS moved to dismiss the Commonwealth's TCPA claim, contending that it was sheltered by the non-profit exemption. That motion was denied by Judge Joseph L. Tauro, the first such ruling addressing a governmental claim that a for-profit company was abusing the non-profit exemption to federal telemarketing laws. The settlement followed.

ICS is a subsidiary of Flagship Capital Services Corp., which is also based in Florida and named in the 2002 complaint. ICS solicited clients for non-profit credit counselors, including Lighthouse Credit Foundation (LCF), a non-profit Florida-based corporation established in 2000 by a former Flagship executive.

Massachusetts consumers who contracted credit counseling services through ICS should direct questions or inquire about eligibility with AG Reilly's Consumer Protection Hotline at (617) 727-8400.

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