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State Attorney General Takes Aim At Debt Relief Companies

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By JOSH POLTILOVE | The Tampa Tribune

Published: October 15, 2008

Updated: 10/15/2008 03:19 pm

TAMPA - The state attorney general's office is taking legal action against several companies that have been offering debt relief services, and it is opening formal investigations into five similar companies.

In Pinellas County, a lawsuit was filed against Dunedin-based Enterprise Technology Group Inc., which was doing business as Ameritrust Financial Card. A settlement was reached with several defendants named in a Pinellas County lawsuit involving a debt elimination scheme under the name of New Leaf Associates LLC.

Subpoenas were served against Largo-based Specialized Funding and Clearwater-based companies Financial Freedom Resources Inc. and ADA Tampa Bay, also known as American Debt Arbitration.

"As more Floridians facing financial difficulties are turning to debt relief organizations for help, an increasing number of these companies are taking advantage of the nationwide financial situation and defrauding consumers," Attorney General Bill McCollum says in a written statement. "Our efforts will send a message to this industry that preying on consumers in financial distress will not be tolerated."

Many debt relief services offer legitimate help for consumers. Details on debt relief can be found at http://myfloridalegal.com.

McCollum's statewide initiative came in response to customer complaints.

His office has received more than 1,400 debt relief complaints this year, about a 62 percent increase compared with 2007.

People have complained about companies failing to live up to promises. People also have complained about being left off worse than when they signed up.

Brad Ashwell, a consumer advocate for the Florida Public Interest Research Group, said people with debt should try to fix the problem on their own before going to a debt relief organization.

"Many times a collection agency will settle for a lower payment, and even eliminate late fees and penalties if a consumer tries to negotiate their debt. This may leave a blemish on a consumer's credit report, but it's one of several ways to stop the downward spiral into deep debt," Ashwell says in a written announcement. "However, fraudulent practices can devastate consumers already suffering from debt and I commend the Attorney General's aggressive actions against these harmful practices."

Van Stufflebeam of Longboat Key said Specialized Funding helped her with debt but that the wording in the company's contract was questionable.

"My biggest thing is, they said that I could pay so much a month, like $400 a month, and that's fine, and I had an agreement that this would be paid off in like two years," she said. "They've changed it since then, that it's going to be longer.

"They did an agreement with one credit card company … and they charged $400 for a collection fee and … I paid them so much to begin with and then they charged more than I was expecting them to do."

In the lawsuit against Dunedin-based Ameritrust Financial Card, the attorney general's office says it charged enrollment fees for a credit card that the company promised would operate like a normal credit card while improving the consumers' credit score. The cards only were usable through the company's online catalog, and Ameritrust never reported the customer's accounts to credit bureaus, according to McCollum's office.

Before the settlement of the Pinellas County lawsuit with New Leaf Associates, the company victimized thousands of consumers nationwide, according to McCollum's office. The company told consumers there was a secret legal administrative process to improve credit scores and eliminate debt. There is no such process. Settlements with 16 defendants prohibit those people from participating in similar schemes. The settlements also require payments of costs and fees and about $320,000 in restitution for Florida victims.

There also is pending litigation against IXE Accelerated Financial Services of Orlando, Jacksonville-based United Debt Solutions, Inc., and the principal owners of Jacksonville-based Provident Financial Services, Inc.

Subpoenas also have been served against Orlando-based Nodelay Enterprises, Inc. — also known as Nodelay Account Services — Equity First Financial Corp. of Casselberry.

The office received the most complaints on its hot line about New Leaf Associates, 823.

Other companies and the number of complaints include IXE Accelerated Financial Services, 21; Ameritrust Enterprise Technology Group or Ameritrust Financial, 128; United Debt Solutions, 41; Provident Financial Services or Future Financial Direct, 32; Financial Freedom Resources, 54; Specialized Funding, 24; American Debt Arbitration, 52; Nodelay Enterprises or Nodelay Account Services, zero; and Equity First Financial Corp., four.

Reporter Josh Poltilove can be reached at jpoltilove@tampatrib.com or (813) 259-7691.

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