Minnesota Attorney General Lori Swanson is cracking down on companies making false promises about lowering interest and credit card rates in exchange for up-front fees paid by consumers.
Swanson announced Tuesday that the state had filed separate lawsuits against three companies posing as debt counseling services that had charged initial fees for services that were never rendered. The three companies singled out by the lawsuits were Priority Direct Marketing, which charged fees of up to $1,590; Clear Financial Solutions, which charged fees of up to $999; and Moneyworks LLC, which charged fees of up to $1,995.
According to the lawsuits, the fraudulent debt counseling services made unsolicited phone calls to residents throughout the state promising lower rates and savings or a full refund for their services. After getting consumers to bite on their claims and pay, the companies would provide a poorly run service, or no service at all, while not returning the refunds.
Additionally, Priority Direct Marketing also allegedly claimed falsely to be affiliated with the government’s federal economic stimulus plan.
"Many people are struggling to keep up with their bills in this tough economy, and a new cottage industry of debt assistance companies promises to help them. But these companies often do little or nothing to justify their high fees, leaving people in even worse shape," said Attorney General Swanson.
In addition to the lawsuits, Swanson also issued a warning to consumers about debt assistance programs that could look to take advantage of the poor economic conditions to lure those in need of debt management into scam.