August 9, 2011
AUGUSTA – Attorney General William J. Schneider announced today that Maine reached an agreement with Texas debt settlement company Credit Solutions of America, Inc. (CSA) and its owner Douglas Van Arsdale to settle allegations of unfair trade practices.
After two days of trial that began July 18th, CSA agreed to enter into a consent judgment to resolve claims that they violated the Maine Unfair Trade Practices Act with an advance fee debt settlement scheme.
Since 2003 CSA provided debt management services to Maine consumers by promising to negotiate with their creditors in order to obtain settlement of their credit card and other unsecured debts. CSA collected advance fees of up to 15% of the total enrolled debt to be negotiated. The company claimed that it could eliminate 40% to 60% of a consumer’s debts.
In most cases CSA held consumers responsible for paying the enrollment fee, regardless of whether all of the enrolled debt was settled. Of the 561 Maine consumers who enrolled with CSA and paid its advance fees, only 6 settled their debts at 40% of the total debt owed.
“Maine consumers in financial distress are particularly vulnerable to deceptive marketing of debt relief services,” said Attorney General Schneider. “Despite CSA’s claims that consumers who enrolled in their program would be debt free in 36 months, the truth is that debt relief is not a quick fix.”
According to the consent judgment, CSA and Van Arsdale agreed that they will not accept payment in advance of providing services and will not enter enrollment contracts with new Maine consumers. In addition, CSA will pay $150,000 for the costs of investigation and litigation related to the resolution of these claims.
CSA will be permitted to continue to provide services to existing Maine customers in compliance with state law. Debt management companies are required to be licensed and bonded through the Maine Bureau of Consumer Credit Protection. These companies must offer an approved consumer education program and ensure that their debt management counselors are properly certified.
“More than 98% of Maine consumers who dealt with this company did not get the promised results,” said Will Lund, Superintendent of the Bureau of Consumer Credit Protection. “Consumers who do their ‘due diligence’ before committing money, and who check to see if a company holds a valid license, can save themselves a lot of grief.”
If a consumer loses money as the result of law violations by licensed companies, Lund said his office can recover those lost funds by making a claim against a surety bond posted as part of the licensing process. Consumers can call the Bureau at 1-800-DEBT-LAW (1-800-332-8529) to verify a company’s license status, or they can review the rosters of licensed companies at the Bureau’s website: http://www.maine.gov/pfr/consumercredit/index.shtml
This case was prosecuted by Assistant Attorney General Linda Conti, Chief of Attorney General Schneider’s Consumer Protection Division and Kate Silsby, Assistant Attorney General with assistance from the Bureau of Consumer Credit Protection within the Maine Department of Professional and Financial Regulation.
To learn more about debt relief services contact:
The Federal Trade Commission 1-877-FTC-HELP (1-877-382-4357) http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre02.shtm
The Maine Bureau of Consumer Credit Protection 1-800-DEBT-LAW (1-800-332-8529) http://www.maine.gov/pfr/consumercredit/index.shtml