City Department of Consumer Affairs (DCA) Commissioner Jonathan Mintz announced on Tuesday that it is issuing subpoenas to 15 debt settlement companies that were either subject to complaints by New Yorkers or are based in the city.
The subpoenas hope to reveal which of these companies have fraudulently lured consumers with illegal advertising claims and charged them with additional upfront fees. It also hopes to find out if anyone has actually been helped, rather than harmed, by their “settlement” services.
“These so-called ‘debt settlement’ companies bombard New Yorkers with ads that fraudulently offer false hope, but instead deliver nothing but added fees and long-lasting financial ruin,” Mintz said.
Among the companies that are being subpoenaed are America Debt Free, Credit 911 and Life Coach, Inc.
The DCA found these companies after looking at consumer complaints as well as the local and online advertisements that these companies put out promising to “cut your debt in half.”
“Today we are issuing subpoenas to 15 debt settlement companies that are using such aggressive and deceptive tactics to prey on vulnerable consumers here in New York so that we can reveal the full extent of their wrongdoing and harm,” Mintz said of the investigation.
A study by the DCA‘s Office of Financial Empowerment (OFE) shows that nearly one in five (18 percent) of New York City households has credit card balances of more than $10,000. In contrast, the rest of the country has about a one in eight (13 percent) households that have a balance in that range.
The DCA licenses more than 1,600 debt collectors. Last year, the DCA received more than 620 complaints against debt collectors, which made wrongful debt collection the department’s number one complaint for the fourth year in a row. Last year, the DCA erased more than $1 million in debt that New Yorkers didn’t owe but were pressured to pay anyway.
New York City offers free financial counseling to people that are struggling with debt, at more than 20 Financial Empowerment Centers across the city.
The centers provide free, one-on-one, confidential counseling available in English, Spanish, Chinese and French. The centers also helps people with money management, budgeting, credit counseling, negotiating with creditors and more.
Mintz advises New Yorkers to use these counseling centers instead of the “too-good-to-be-true offers” they get from the debt settlement companies.
“I urge those struggling with debt to resist these to take advantage of the city’s free, professional one-on-one financial counseling at one of more than 20 Financial Empowerment Centers,” Mintz said.
