Debt settlement companies investigated for ‘unscrupulous’ practices

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In this time of debt troubles, there are plenty of companies willing to take your money with the promise of making your debts disappear. But New York Atty. Gen. Andrew Cuomo said today that many so-called debt settlement companies -- one of which charged money for advice such as mowing lawns to make extra income -- are part of ‘a rogue industry.’

He said the companies have been ‘offering consumers false hope, charging tremendous fees, and leaving them in a worse financial situation.’ His office issued subpoenas today to 14 companies, including five based in California, as part of a nationwide investigation.

Cuomo accused companies of making unfounded advertising claims, including that they could reduce credit card debt as much as 75% by negotiating with creditors. A settlement plan, if reached, would still require unrealistic payments for people who were broke, he said, yet the companies would urge clients to raise extra funds by selling blood plasma, cutting down on car insurance and mowing lawns.

Our dads gave out that last bit of advice -- for free.

Consumers who suspect they have been defrauded by a debt settlement company can report it to the attorney general’s office at (800) 771-7755 or through the office’s website.

-- David Colker