Maryland Orders Debt Consolidation to Pay Over $2 Million in Penalties and Restitution
On August 22, the Attorney General of Maryland Posted a final order against a debt consolidation transaction, resolving allegations that the respondents collected hundreds of thousands of dollars from consumers to help them consolidate and pay off their outstanding debts, but failed to provide the promised services. According to the AG, sponsors deceptively promised that their services would save consumers money, pay off outstanding debts in less time than the original loan terms and improve credit scores consumers. Consumers were charged upfront fees ranging from $11,000 to $118,000 for the services, along with additional amounts that were supposed to be used to pay off their outstanding debts. However, instead of providing the promised services, the respondents allegedly used most of the funds for their personal use while the consumers were threatened with seizure and had their cars repossessed. The final order permanently bars the respondents from violating the Maryland Consumer Protection Act, the Maryland Mortgage Relief Services Act, the Maryland Commercial Credit Services Act and the Credit Services Act. Maryland Debt Management. The respondents are also required to pay a penalty of $1.2 million and must reimburse all monies collected from consumers who did not receive the promised services. The AG estimates that the total payments will exceed $2 million.