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By T.W. Budig
ECM Capitol reporter
Connie Grady of Stacy lost her job, and she and her husband have struggled to remain financially afloat.
“We’re having a hard time right now, a very hard time,” said Grady, speaking at a Capitol press conference Tuesday, Sept. 22, called to announce the filing of several lawsuits against out-of-state debt relief companies by Attorney General Lori Swanson.
Grady, receiving an unsolicited phone call from in March, maxed out a credit card after paying $990 after being promised by a debt relief company that they could save her $3,000 in 30 to 45 business days by lowering the interest rates on her credit cards and home mortgage.
Although cautious, Grady agreed — she later tried to get a refund but was refused.
“I pleaded with them to give my money back and they said, ‘No. No,’” said Grady.
The Money Works delivered nothing of value to Grady — she herself negotiated with her mortgage company for a lower interest rate and paid off two credit cards, according to the lawsuit.
Grady’s last calls to the company went unanswered — the line had been disconnected.
Left: Attorney General Lori Swanson filed three lawsuits last week. Photo by T.W. Budig
Grady’s experience is hardly unique, explained Swanson.
Indeed, Minnesota has been “deluged” by unsolicited phone calls from debt relief companies — many here today, gone tomorrow — promising to lowering interest rates for an upfront fee, explained Swanson.
“These companies charge financially-strapped people a lot to lower the interest rates on their credit cards, only they failed to do so, leaving people even further behind in their bills,” said Swanson.
Three lawsuits filed
Swanson filed three lawsuits in Ramsey County Court against three separate companies: Priority Direct Marketing, a Washington corporation; Clear Financial Solutions, a Florida corporation, and Moneyworks, based in Georgia.
The companies charges as much $1,995 in upfront fees to consumers for their services.
In her suits Swanson alleges that the companies broke state consumer laws, and seeks civil penalties and restitution.
Because Swanson suspects the operators of these “fly by night” debt relief companies probably operate multiple companies, she was not certain how successful the lawsuits would be, she explained.
She hopes court orders will help her office “pierce the corporate veil” and find out exactly who the operators are, said Swanson.
Debt service companies often use names that sound similar to credit card companies and some seem to have access to consumer information and are able to cite accounts and debt levels, something that is disturbing, Swanson explained.
Warns consumers
Besides warning Minnesota consumers, Swanson also sent a letter to the Federal Trade Commission (FTC) urging federal action in regard to the debt relief service industry.
In the letter, Swanson said she backs a FTC proposal that would prohibit the collection of fees by these companies until after the promised service has been performed.
Should the feds fail to act, Swanson said she would seek state legislation.
Although officials at Clear Financial Solutions and the Money Works could not be immediately reached, a company official at Priority Direct Marketing said some customers are always unhappy with a business — any business.
He indicated the company was unaware of the lawsuit.
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