Texas AG files fraud suit against Credit Solutions of America

Texas Attorney General Greg Abbott has filed a lawsuit against a Richardson debt settlement company, accusing it of defrauding Texans by failing to negotiate settlements with its customers’ creditors.

Abbott’s office said Credit Solutions of America Inc. claimed that it “would eliminate its customers’ unsecured debts, such as credit card accounts, in as little as three years.”

However, Abbott’s office said an investigation revealed “that the defendant failed to negotiate settlements with creditors for most accounts entered into its program.”

“Further, when CSA did negotiate settlements with creditors, its clients did not always receive the 60 percent reduction they were promised.”

Debt settlement companies typically negotiate with a consumer’s creditors to settle debt for less than is owed.

Abbott’s office said that because Credit Solutions’ debt settlement program requires customers to stop making payments to creditors, “many CSA customers could face unforeseen late fees, additional interest, increased collections attempts, and even lawsuits by their creditors.”

His office said it has received 140 complaints against Credit Solutions in the past two years.

Also, the Better Business Bureau, which gave the company an “F” rating, received more than 1,600 complaints against the company in the past 36 months, Abbott said.

Abbott’s office seeks an injunction that would prevent Credit Solutions from “continuing to unlawfully promise services which it does not deliver.”

Credit Solutions officials said their goal is to help customers.

“We absolutely look forward to coming to an acceptable resolution and working with Greg Abbott and his team,” said Heather Carmichael, vice president of legislative affairs at Credit Solutions. “We’re 110 percent committed to customer satisfaction.”

The company also said it “works diligently to resolve all complaints with the Better Business Bureau, and to our knowledge any BBB complaints referred to by the attorney general of Texas have been appropriately addressed.”

The company said on its Web site that it’s settled more than $350 million of debt during the past year and more than $800 million since 2003.

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