Deceptive 'Debt Settlement' Company Busted


Attorney General Eric Schneiderman has announced a major settlement that will refund money to more than 5,000 New Yorkers across the state who were defrauded by a deceptive debt settlement company.
Freedom Debt Relief misled debt-saddled consumers about the amount of money they would save and the services it would provide, while reaping large profits in up-front fees.
It promised to eliminate large portions of debt by negotiating directly with creditors, claiming that it could reduce total debt by 40 to 60 percent.
Consumers were told that they would be “debt-free” within anywhere from one to three years.
However, the fundamentally flawed program left most New York consumers with as much or more debt than they had before signing up for the service.
In lieu of making even the minimum payments to their creditors, customers made monthly deposits to a designated account that was purportedly to be used to settle their debt.
Freedom Debt deducted its up-front fees from this account before it engaged in a discussion with consumers’ creditors.
When consumers were unable to make the strict monthly deposit schedule the program required, they dropped out of the program – having paid most or all of the fees without receiving the promised services.
Some saw their credit ratings fall, and were subject to wage garnishment and debt collection suits.
As part of the settlement, Freedom Debt will pay $1.1 million in refunds to former customers who suffered financial harm.

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