Consumers Beware: Cuomo Goes After Nationwide Asset Services and Credit Solutions of America

In a follow-up to our post on Nationwide Asset Services, New York Attorney General Andrew Cuomo filed a lawsuit against Nationwide and Credit Solutions of America last week.

The two debt negotiation firms are being charged with fraudulent business practices and false advertising.

Credit Solutions of America has signed up 18,000 customers in New York State since 2004, earning $17 million in fees, but has settled debts for less than 2,000 of its customers. At its height, Credit Solutions had 200,000 customers with a combined debt of $2.25 billion. Its policy of charging a fee in advance of 15 percent of the total debt drew the attention of state regulators.

Credit Solutions had to refund $700,000 to customers in South Carolina in 2007 after violating the state’s credit counseling laws. It had to pay $588,000 to Idaho customers in 2008 for operating in the state without a license. In March, the company was sued by the Texas attorney general for fraud.

Nationwide Asset has signed up 1,981 customers since 2006, yet has settled debts for only 64 of them.

Andrew Cuomo issued the following statement:

“These companies claim to be the light at the end of the tunnel, but time after time they have shown that they only add to the burdens of Americans dealing with debt,”

Cuomo is initiating a massive investigation into the debt settlement industry, which has grown dramatically as the economy has worsened. He has also filed 15 subpoenas against other major debt negotiation firms in the past month.