![]() ![]() The company will also pay $70,000 to reimburse the state for the costs of the investigation and litigation. However, as part of the settlement submitted today to King County Superior Court, the company agreed to the restitution program and to comply with certain restrictions on how it conducts business.įreedom Debt Relief must refund Washington consumers for all fees paid in connection with debts that weren’t settled or aren’t in active negotiation programs - those fees add up to $742,613 or more. The Washington Attorney General’s Office alleged Freedom Debt Relief sometimes charged consumers more than the state’s Debt Adjusting Act allows, took its fees before the time permitted by the statute and failed to adequately inform some consumers about how the program works.įreedom Debt Relief denied the states allegations and contends that the Debt Adjusting Act doesn’t apply to its business model. Washington’s Debt Adjusting Act caps the fee that a debt settlement company may charge at 15 percent of the total enrolled debt. Today’s settlement bars Freedom Debt Relief from accepting any new clients in Washington without notifying the Attorney General’s Office, although it may continue to negotiate debt settlements for those currently enrolled in its program. Attorney General Rob McKenna entered an amicus brief in that case, which is still pending in U.S. “Although the company disagrees, it will refund those fees to eligible former and current customers.”įreedom Debt Relief stopped enrolling Washington residents in March 2009, when a private class-action lawsuit was filed against it. “We believe hundreds of Freedom Debt Relief customers paid more fees than allowed under Washington’s law,” said Assistant Attorney General Bob Lipson. The Attorney General’s Office estimated that more than 570 of those consumers are eligible restitution under the state’s settlement. When sufficient money has accumulated in a consumer’s account, Freedom Debt Relief attempts to negotiate with creditors to settle the debts for a fraction of the balance.Ībout 1,100 Washington consumers who collectively owed $35 million in debt enrolled in the program since Freedom Debt Relief started operating in 2003. The company deducts its fees from the account. ![]() Debtors then pay into a bank account they control, which is subsequently used to settled their debts. Under its program, consumers stop making payments to their unsecured creditors and allow those accounts to go into default. “Failing to inform customers that their credit may be ruined and taking illegal fees - when those individuals are making a good-faith effort to settle their debts – are practices that we aim to stop.įreedom Debt Relief advertises on its Web site that it has settled more than $1 billion in debt for its customers. “We’re paying special attention to operations that take advantage of people who, due to this tough economy, are already struggling to put food on the table and keep the lights on,” Attorney General Rob McKenna said. The California-based company agreed to pay up to nearly $800,000 in restitution to resolve allegations it violated Washington’s Consumer Protection and Debt Adjusting Acts. ![]() SEATTLE – Thanks to the Attorney General’s Office, hundreds of cash-strapped Washington consumers who paid Freedom Debt Relief to work out a deal with their credit card providers will be feeling some relief. Attorney General’s Office argued Freedom Debt Relief’s fees were improper ![]()
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