Illinois Attorney General Lisa Madigan sued seven debt settlement firms and six of their executives, alleging the firms misrepresent their services to consumers as a way to boost credit scores.
Each of the four complaints alleges the defendants violated the Illinois Consumer Fraud and Deceptive Business Practices Act by practicing deceptive marketing and charging excessive fees.
Each complaint asks the court to prohibit the defendants from engaging in debt settlement in Illinois and orders the defendants to pay restitution to consumers. That restitution includes civil penalties of $50,000 for violating the Consumer Fraud Act, another $50,000 penalty for each violation committed with the intent to defraud and a $10,000 penalty per violation committed against a person 65 or older.
The defendants are: Clear Your Debt LLC, Swiftrock Financial Inc. and Orion Processing LLC — based in Austin and Lago Vista, Texas — and their managing members, Derin Scott and Shannon Scott; Endebt Solutions LLC of Long Beach, Calif., which does business as DebtOne Financial; Debt Consultants of America Inc. in Dallas and its owner Robert J. Creel; American Debt Arbitration in Clearwater, Fla., and its president and director, Glenn P. Stewart; and Nationwide Asset Services Inc. in Phoenix, along with its president, William Anderson, and Gary K. Brown, a secretary and director at the firm.
"After enrolling in a debt-settlement program, consumers too often find themselves in even worse financial straits," said Madigan, who filed the suits Wednesday in Sangamon County Circuit Court.
Last month, Madigan's office proposed legislation that would prohibit debt settlement firms from charging up-front fees, basing final compensation on the amount saved from settling a debt, and advising consumers to stop paying their creditors.