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May 19, 2008 10:12 pm US/Eastern
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I-Team Investigates Credit Solutions
BOSTON (WBZ) ―
"They promised after three years I would be completely out of debt," said Darlene Bradford of South Weymouth.
"They were going to lower my debt by about 50 percent," Misti Adams of Northampton explained.
Two different women with two very similar stories. They are talking about Credit Solutions -- the largest for-profit debt resolution company in the United States.
"It sounded like a good deal," said Darlene.
"I thought it was great…that was definitely the answer," Misti said.
Both women had gotten into serious credit card debt and turned to Credit Solutions for help. Both ended up deeper in the red. "I think they're taking advantage of people, taking their money, and not doing anything for it."
Here in Massachusetts and across the country, Credit Solutions has a troubled history. They had more than 1,000 consumer complaints filed with the Better Business Bureau over the past three years. Two states charged the company with violating credit counseling laws and Credit Solutions paid out more than $1 million in refunds.
The company is now the subject of a class action suit alleging it's ripping off customers.
Attorney Tyler Weaver is handling the case. "What Credit Solutions does is prey on a group of extremely vulnerable people."
Here's how Credit Solutions works. Clients agree to pay Credit Solutions 15 percent of their total debt. In return, Credit Solutions will negotiate a settlement with credit card companies and reduce the amount the client has to pay by as much as 60 percent.
Credit Solutions tells clients like Darlene and Misti to stop paying their credit card bills and refer the creditors to Credit Solutions. The problem?
"Credit solutions didn't do anything to resolve it?" asked WBZ's Joe Burgantino.
"Nothing," Darlene said. "I think they made two phone calls the whole time."
We got the same story from Misti: "Didn't receive any settlement offers, not one."
But while they waited for Credit Solutions to help, both women racked up late fees and finance charges. "I was just paying someone to get me further in debt, ruin my credit, not act on my behalf whatsoever," says Misti.
Darlene ended up paying Credit Solutions $1,000 and got no debt relief. Misti's debt increased $2,000 because she followed Credit Solution's advice.
"You have to be cautious," says Paula Fleming of the Better Business Bureau.
She says there are a lot of scam artists in the debt resolution business. "If they're asking for money upfront, that's a huge red flag. Typically, you don't pay $500 to someone to look at your debt and help you get out of it."
But as credit card debt piles up in a bad economy, more and more people will become easy prey for those preaching false hope. Some advice: If you have a lot of credit card debt, try working out a deal on your own. As for Credit Solutions, they refused to talk on camera or even issue a statement.
Click here for more information about the class action suit against Credit Solutions.
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