New York Attorney General Andrew Cuomo recently won a lawsuit against Nationwide Asset Services. The court’s decision mandated that the company pay $200,000 in penalties and post a $500,000 bond if it wants to do business in that state.
Nationwide Asset Services is a national debt settlement company that promises consumers a 25 to 40 percent reduction in their debt. According to Cuomo, only a fraction of one percent saw such savings, while the vast majority continued to be harassed by debt collectors.
A press release issued by the Attorney General’s office quoted Cuomo as saying, “This company made promises to people who were searching for financial help and trying to turn their lives around. But the promises never came true and, in many cases, New Yorkers were left in worse condition than when they started. Thanks to this ruling, the company has to put its money where its mouth is with a performance bond if it wants to do business in New York.”
The decision also applies to the company’s affiliates, ServiceStar and Universal Debt Reduction, as well as its marketer, FGL Clearwater (dba American Debt Arbitration).
The AG’s press release noted:
Debt settlement companies represent that they can substantially reduce consumer debt by negotiating directly with creditors, on behalf of their customers, to pay off outstanding balances at less than the amounts owed. However, Attorney General Cuomo’s Office has found that many of these debt settlement plans are often flawed and, based upon complaints, often mislead consumers about the nature of their services. The debt settlement plans are generally premised on consumers’ aggregating savings, over one to three years, from which both the payment of the company’s fees and any negotiated settlement are to be made. Yet most consumers who are targeted by these companies are unable to meet the savings requirements because of their already-precarious financial situation.
In addition, the companies often take their substantial fees up-front and keep these fees even when they do not provide the promised services. As a result, many consumers find themselves worse off financially because of these debt settlement plans.
