Fla. AG cracking down on debt relief industry

Oct 15, 2008

South Florida Business Journal--October 15, 2008

South Florida Business Journal – by Susan R. Miller

While many Floridians are being hit hard by the economic downturn, for some, the money crunch is delivering a one-two punch.

First, consumers find themselves wallowing in debt. Then, they are being taken advantage of by unscrupulous companies that claim to be able to eliminate or significantly reduce debt – for a fee.

In the last year alone, the Florida attorney general’s office has received more than 1,400 complaints relating to such companies, a 62 percent increase over the previous year.

On Wednesday morning, Attorney General Bill McCollum unveiled what’s been an ongoing statewide initiative to crack down on companies claiming to be able to help repair, reduce or eliminate debt.

“Most of these debt organizations are just plain malarkey and people need to know that, said McCollum during a press conference. “If someone is promising to relieve your debt and they are not a reputable debt reduction service and ask for money up front, then it’s probably too good to be true.”

McCollum said his office is investigating 26 companies – many of which are located in Florida, but do business all over the country.

In addition, his office has taken legal action against five companies.

In South Florida, Laura L. Hess, a Pompano Beach attorney, was given until Thursday to come up with a plan to resolve charges that she took money from thousands of clients who believed she would help them eliminate their debt.

“That’s a poster-child case for us,” McCollum said. “She has lost her license to practice law. It’s a bad situation when a lawyer goes out and does that.”

Hess’ law license was suspended. She also is the subject of several other civil investigations by at least three attorneys general.

In February, North Carolina’s attorney general filed suit against Hess and Edward Cherry, of Coral Springs, alleging that at least 220 North Carolina consumers paid more than $500,000 to what he called “an illegal debt relief scheme.”

McCollum said most of the bad players are companies that solicit business. He urged consumers to do their homework, to investigate a company and ask for promises in writing.