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JPMorgan Chase & Co. this week won $4.4 million in a settlement with a group of interrelated Florida law firms the state's attorney general says defrauded thousands of consumers over several years with bogus promises to settle their credit card debts. Chase has agreed to release the credit card debts of approximately 13,000 customers as part of the settlement. Chase Card Services in February 2008 sued the Broward County-based Hess Kennedy Chartered LLC law firm and affiliated companies for engaging in allegedly fraudulent debt-settlement activities, while the Florida Attorney General's office separately pursued its own investigation and lawsuit against the firm. Representatives of Hess Kennedy allegedly told consumers that the firm had audited their credit card accounts and found numerous violations of the Fair Credit Billing Act, then sent notices to creditors disputing all charges. Consumers, who paid 15% to 25% of their total debts as upfront fees to Hess Kennedy, were told to no longer pay their creditors. That led to lawsuits and other actions by creditors against several debtors. "This firm was flagrant in the way it diverted consumers' payments, but there are many other debt-settlement companies currently under investigation around the country for making misrepresentations to consumers," says Beth Moskow-Schnoll, a Wilmington, Del.-based partner with the law firm Ballard Spahr Andrews & Ingersoll, which represents Chase. Moskow-Scholl tells CardLine that another case on behalf of Chase is pending against the Prattville, Ala.-based Allegro Law and its principal, along with Woodbury, N.Y.-based AmeriCorp Inc., which supplied back-office services to Allegro's alleged debt-settlement scheme. The Hess Kennedy firm is in court-ordered receivership and attorney Laura L. Hess, its principal, has been disbarred in Florida for five years.
