Attorney General McGraw Settlement

Attorney General McGraw Reaches Settlement with Four Debt Relief Companies for 366 Consumers

Attorney General Darrell McGraw announced settlement agreements with four debt relief companies that brought to an end their controversial practice of "debt settlement" services in West Virginia. The companies, Debt Relief of America, L.P., of Dallas, Texas; Fidelity Debt Consultants, Inc. of Clearwater, Florida; David Huffman d/b/a Freedom Group of San Diego, California; and New Horizons Debt Relief of Aliso Viejo, California, agreed to permanently discontinue debt settlement and any other kinds of debt relief services in West Virginia. They also agreed to refund all fees and charges that they collected which, collectively, will result in refunds of approximately $517,000 in fees and charges for 366 West Virginia consumers.

Debt Relief of America and Fidelity Debt Consultants had the bulk of the accounts in West Virginia, servicing all but a few of the affected consumers. In contrast, New Horizons and Freedom Group serviced only three consumers combined and accounted for $4,285.86 and $7,000, respectively, of the $517,000 owed to West Virginia consumers.

Debt settlement is a plan or strategy offered for a fee in which consumers are advised or expected to stop making payments to credit card banks or other unsecured creditors. The consumers are directed to make monthly payments to the debt settlement company or into a separate fund or account for an unspecified time until the debt settlement company determines that sufficient funds have been accumulated. The company then attempts to negotiate lump sum settlements of the consumers’ accounts for less than the balance owed.

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