InfoBytes Blog
Maryland orders debt-consolidation operation to pay more than $2 million in penalties and restitution
On August 22, the Maryland attorney general issued a final order against a debt-consolidation operation, resolving allegations that the respondents collected hundreds of thousands of dollars from consumers to help them consolidate and pay off outstanding debt but failed to provide the promised services. According to the AG, the respondents deceptively promised that their services would save consumers money, allow consumers to pay off outstanding debts in a shorter timeframe than the original loan terms, and improve consumers’ credit scores. Consumers were charged upfront fees ranging from $11,000 to $118,000 for services plus additional amounts that were supposed to go toward paying off their outstanding debts. However, instead of providing the promised services, the respondents allegedly used most of the funds for their own personal use while consumers were threatened with foreclosure and had their cars repossessed. The final order permanently enjoins the respondents from violating the Maryland Consumer Protection Act, the Maryland Mortgage Assistance Relief Services Act, the Maryland Credit Services Business Act, and the Maryland Debt Management Services Act. The respondents are also required to pay a $1.2 million penalty and must refund all monies collected from consumers who did not receive the promised services. The AG estimates that total payments will exceed $2 million.