Credit Solutions of America
Encyclopedia
Credit Solutions of America is a privately owned debt settlement
company based in Dallas, Texas. It says it has more than 750 employees and has served more than 250,000 customers. Established in 2003 by Doug Van Arsdale, the firm says it is the largest of its kind. Credit Solutions’ management include: Doug Van Arsdale, CEO; Jon Sisson, President; Mona Cayard, CFO; and, Heather Carmichael, Director of Operations. Credit Solutions is the subject of several pending lawsuits nationwide.
is 50 cents on the dollar. However, the New York Attorney General Andrew Cuomo disagrees, and in his state's lawsuit against the company has said Credit Solutions settles debts for only 1 percent of its customers in that state.
The Better Business Bureau
reports that Credit Solutions has an “F” rating, the lowest rating given, and that as of June 19, 2010 it has received 1477 complaints against the company in the preceding 36 months. According to the report,
Of these 1477 complaints, the company has resolved 1152 complaints, 319 had been "administratively closed," meaning they could not be settled, and 6 were unresolved. Of the 1152 reported as resolved, the customer acknowledged acceptance of 519 resolutions and failed to acknowledge acceptance of 633.
Credit Solutions charges a flat 15 percent fee on a client’s total debt. So, if a consumer has $10,000 in total debts, Credit Solutions will collect a $1500 fee upfront. This 15 percent fee is not disclosed on the firm’s website, but has been disclosed by a New York state lawsuit against the company.
In 2007, the company was recognized by JD Powers and Associates, a marketing information services firm, for excellence in satisfying its call center customers. Credit Solutions has also been certified as ISO 9000:2008 from BSI, which is a result of ongoing company wide audits by an independent third party to ensure quality management systems.
The company has a community service group called "Credit Solutions Cares," through which employees volunteer with Dallas/Fort Worth area nonprofit organizations and help them to raise donations.
of six other U.S. states.
consumers’ complaints about Credit Solutions' high upfront fees, in May 2010, the Attorney General of Oregon ruled that the company was banned from doing business in that state for three years. As part of the decision, Credit Solutions was required to give $2600 in restitution to four Oregon residents, and some of the company’s 800 other Oregon customers may be refunded the firm’s fees if they are dissatisfied with the services. Credit Solutions provided no comment on the settlement.
In May 2007, the Idaho
Department of Finance, the state’s financial regulator, found that Credit Solutions was providing “debt settlement” services to state residents without the required license
for credit counseling
. As a result, the Department of Finance settled with the company, and Credit Solutions was required to return $588,000 in fees it had collected from Idaho residents, and pay $3000 in attorney fees and investigative expenses. Today, Credit Solutions is not a licensed credit counselor in Idaho, and cannot be because Idaho requires credit counseling companies to be 501c3 nonprofit organization
s.
’s Attorney General filed suit against the company alleging that “Credit Solutions of America unlawfully charges significant advance fees before completing or, in many instances, commencing performance of its debt settlement services. The Attorney General has received over 140 complaints about the company, but estimates that it has thousands of Florida victims.”In response, Credit Solutions said, “This lawsuit is a political gambit that fails to recognize the value that...Credit Solutions of America Inc., provides to Florida residents.”
In September 2009, Illinois
Attorney General Lisa Madigan
filed suit against Credit Solutions alleging that “the company falsely claims that its services can help to reduce consumers' credit card debt by 50 percent.” . The firm responded that “these charges are outrageous and baseless.”
In November 2009, the Maine
Attorney General filed suit against the company and its president Douglas Van Arsdale. The suit alleges that the firm “violated the law by using deceptive and unfair practices in marketing debt settlement services, and for failing to register as a debt management service.” The suit seeks to recover fees paid by Maine consumers to the company, plus civil penalties and costs.
In June 2009, the Missouri
Attorney General sued Credit Solutions saying it “did little or nothing to solve” customers’ debt problems. Credit Solutions representatives did not provide comment.
In May 2009, New York
Attorney General Andrew Cuomo
filed suit against Credit Solutions for “fraudulent business practices and false advertising
.” The lawsuit alleges that “18,000 New Yorkers signed up as the company’s customers between January 2003 and September 2008. The firm promised a 60% reduction in its consumers’ outstanding debt, but an average of 1% received that savings.. The company declined to comment at the time the suit was filed.
In the company’s home state in March 2009, Texas
Attorney General Greg Abbott
has filed suit against the company for “conducting an illegal scheme that defrauded Texans with financial problems.” The suit says that the firm not only charged its customers for services that were not delivered, but that since its debt settlement program forces customers to stop making payments to their creditors, many customers could face unexpected late fees, interest, more collection attempts, and even lawsuits by their creditors. The Attorney General has received more than 140 complaints against the firm in the past two years.
and attain legislation favorable to the firm.
Nightline
program did an investigative story on Credit Solutions. In the piece, the reporter interviewed Heather Carmichael, the company’s director of operations. Carmichael was asked about the three separate state attorneys general (now five) that were suing Credit Solutions, and responded. "I wish there was an easy answer to that question. The industry is changing so rapidly. And there is more change to come.” She declined to comment further on the pending litigation except to say, "I can tell you that we are working diligently with them toward an acceptable solution."
Nightline asked her what percent of the firm’s clients pay their fees without having their debt settled by Credit Solutions. She responded, "That's a great question. I don't have that number, but I can certainly look at it for you." Carmichael has not provided that information to ABC News. New York Attorney General Cuomo said Credit Solutions settles debts for only 1 percent of its customers in that state. Credit Solutions posted a rebuttal to the ABC report on its website.
A March 2010, CBS
Early Show story on the debt settlement industry criticized Credit Solutions of America's business practices, and provided consumer advice for debt settlement counseling.
Debt settlement
Debt settlement, also known as debt arbitration, debt negotiation or credit settlement, is an approach to debt reduction in which the debtor and creditor agree on a reduced balance that will be regarded as payment in full....
company based in Dallas, Texas. It says it has more than 750 employees and has served more than 250,000 customers. Established in 2003 by Doug Van Arsdale, the firm says it is the largest of its kind. Credit Solutions’ management include: Doug Van Arsdale, CEO; Jon Sisson, President; Mona Cayard, CFO; and, Heather Carmichael, Director of Operations. Credit Solutions is the subject of several pending lawsuits nationwide.
Background
Debt settlement companies negotiate with creditors to accept reduced payments. Credit Solutions of America says that it has settled more than $900 million of debt since its inception in 2003, and says that the average settlementSettlement (finance)
Settlement of securities is a business process whereby securities or interests in securities are delivered, usually against payment of money, to fulfill contractual obligations, such as those arising under securities trades....
is 50 cents on the dollar. However, the New York Attorney General Andrew Cuomo disagrees, and in his state's lawsuit against the company has said Credit Solutions settles debts for only 1 percent of its customers in that state.
The Better Business Bureau
Better Business Bureau
The Better Business Bureau , founded in 1912, is a corporation consisting of several private business franchises of local BBB organizations based in the United States and Canada, which work through their parent corporation, the Council of Better Business Bureaus .The Better Business Bureau, through...
reports that Credit Solutions has an “F” rating, the lowest rating given, and that as of June 19, 2010 it has received 1477 complaints against the company in the preceding 36 months. According to the report,
- "Complaints are regarding dissatisfaction with the company's service and misrepresentation of the results of the debt negotiation program. Specifically, customers complain that paying the company fee and following the debt negotiation program does not reduce debt, as stated by company representatives. As a result of the program, customers complain, they have an increase in debt, due to late fees or additional interest and negative credit reporting. The company resolves complaints by offering refunds or referring to the Client Services Agreement for explanation. Although the company resolves most of the complaints it has failed to correct the underlying reason for the complaints."
Of these 1477 complaints, the company has resolved 1152 complaints, 319 had been "administratively closed," meaning they could not be settled, and 6 were unresolved. Of the 1152 reported as resolved, the customer acknowledged acceptance of 519 resolutions and failed to acknowledge acceptance of 633.
Credit Solutions charges a flat 15 percent fee on a client’s total debt. So, if a consumer has $10,000 in total debts, Credit Solutions will collect a $1500 fee upfront. This 15 percent fee is not disclosed on the firm’s website, but has been disclosed by a New York state lawsuit against the company.
In 2007, the company was recognized by JD Powers and Associates, a marketing information services firm, for excellence in satisfying its call center customers. Credit Solutions has also been certified as ISO 9000:2008 from BSI, which is a result of ongoing company wide audits by an independent third party to ensure quality management systems.
The company has a community service group called "Credit Solutions Cares," through which employees volunteer with Dallas/Fort Worth area nonprofit organizations and help them to raise donations.
Controversy
Credit Solutions has settled cases with the states of Oregon and Idaho. It remains the subject of lawsuits by the Attorneys GeneralAttorney General
In most common law jurisdictions, the attorney general, or attorney-general, is the main legal advisor to the government, and in some jurisdictions he or she may also have executive responsibility for law enforcement or responsibility for public prosecutions.The term is used to refer to any person...
of six other U.S. states.
Settled legal cases
As a result of OregonOregon
Oregon is a state in the Pacific Northwest region of the United States. It is located on the Pacific coast, with Washington to the north, California to the south, Nevada on the southeast and Idaho to the east. The Columbia and Snake rivers delineate much of Oregon's northern and eastern...
consumers’ complaints about Credit Solutions' high upfront fees, in May 2010, the Attorney General of Oregon ruled that the company was banned from doing business in that state for three years. As part of the decision, Credit Solutions was required to give $2600 in restitution to four Oregon residents, and some of the company’s 800 other Oregon customers may be refunded the firm’s fees if they are dissatisfied with the services. Credit Solutions provided no comment on the settlement.
In May 2007, the Idaho
Idaho
Idaho is a state in the Rocky Mountain area of the United States. The state's largest city and capital is Boise. Residents are called "Idahoans". Idaho was admitted to the Union on July 3, 1890, as the 43rd state....
Department of Finance, the state’s financial regulator, found that Credit Solutions was providing “debt settlement” services to state residents without the required license
License
The verb license or grant licence means to give permission. The noun license or licence refers to that permission as well as to the document recording that permission.A license may be granted by a party to another party as an element of an agreement...
for credit counseling
Credit counseling
Credit counseling is a process that involves offering education to consumers about how to avoid incurring debts that cannot be repaid through establishing an effective Debt Management Plan and Budget...
. As a result, the Department of Finance settled with the company, and Credit Solutions was required to return $588,000 in fees it had collected from Idaho residents, and pay $3000 in attorney fees and investigative expenses. Today, Credit Solutions is not a licensed credit counselor in Idaho, and cannot be because Idaho requires credit counseling companies to be 501c3 nonprofit organization
Nonprofit organization
Nonprofit organization is neither a legal nor technical definition but generally refers to an organization that uses surplus revenues to achieve its goals, rather than distributing them as profit or dividends...
s.
Current lawsuits
In October 2009, FloridaFlorida
Florida is a state in the southeastern United States, located on the nation's Atlantic and Gulf coasts. It is bordered to the west by the Gulf of Mexico, to the north by Alabama and Georgia and to the east by the Atlantic Ocean. With a population of 18,801,310 as measured by the 2010 census, it...
’s Attorney General filed suit against the company alleging that “Credit Solutions of America unlawfully charges significant advance fees before completing or, in many instances, commencing performance of its debt settlement services. The Attorney General has received over 140 complaints about the company, but estimates that it has thousands of Florida victims.”In response, Credit Solutions said, “This lawsuit is a political gambit that fails to recognize the value that...Credit Solutions of America Inc., provides to Florida residents.”
In September 2009, Illinois
Illinois
Illinois is the fifth-most populous state of the United States of America, and is often noted for being a microcosm of the entire country. With Chicago in the northeast, small industrial cities and great agricultural productivity in central and northern Illinois, and natural resources like coal,...
Attorney General Lisa Madigan
Lisa Madigan
Lisa Madigan has been the 41st Attorney General of the US state of Illinois since 2003, when she became the first female attorney general for Illinois...
filed suit against Credit Solutions alleging that “the company falsely claims that its services can help to reduce consumers' credit card debt by 50 percent.” . The firm responded that “these charges are outrageous and baseless.”
In November 2009, the Maine
Maine
Maine is a state in the New England region of the northeastern United States, bordered by the Atlantic Ocean to the east and south, New Hampshire to the west, and the Canadian provinces of Quebec to the northwest and New Brunswick to the northeast. Maine is both the northernmost and easternmost...
Attorney General filed suit against the company and its president Douglas Van Arsdale. The suit alleges that the firm “violated the law by using deceptive and unfair practices in marketing debt settlement services, and for failing to register as a debt management service.” The suit seeks to recover fees paid by Maine consumers to the company, plus civil penalties and costs.
In June 2009, the Missouri
Missouri
Missouri is a US state located in the Midwestern United States, bordered by Iowa, Illinois, Kentucky, Tennessee, Arkansas, Oklahoma, Kansas and Nebraska. With a 2010 population of 5,988,927, Missouri is the 18th most populous state in the nation and the fifth most populous in the Midwest. It...
Attorney General sued Credit Solutions saying it “did little or nothing to solve” customers’ debt problems. Credit Solutions representatives did not provide comment.
In May 2009, New York
New York
New York is a state in the Northeastern region of the United States. It is the nation's third most populous state. New York is bordered by New Jersey and Pennsylvania to the south, and by Connecticut, Massachusetts and Vermont to the east...
Attorney General Andrew Cuomo
Andrew Cuomo
Andrew Mark Cuomo is the 56th and current Governor of New York, having assumed office on January 1, 2011. A member of the Democratic Party, he was the 64th New York State Attorney General, and was the 11th United States Secretary of Housing and Urban Development...
filed suit against Credit Solutions for “fraudulent business practices and false advertising
False advertising
False advertising or deceptive advertising is the use of false or misleading statements in advertising. As advertising has the potential to persuade people into commercial transactions that they might otherwise avoid, many governments around the world use regulations to control false, deceptive or...
.” The lawsuit alleges that “18,000 New Yorkers signed up as the company’s customers between January 2003 and September 2008. The firm promised a 60% reduction in its consumers’ outstanding debt, but an average of 1% received that savings.. The company declined to comment at the time the suit was filed.
In the company’s home state in March 2009, Texas
Texas
Texas is the second largest U.S. state by both area and population, and the largest state by area in the contiguous United States.The name, based on the Caddo word "Tejas" meaning "friends" or "allies", was applied by the Spanish to the Caddo themselves and to the region of their settlement in...
Attorney General Greg Abbott
Greg Abbott
Gregory Wayne "Greg" Abbott is the Texas Attorney General, and is the second Republican since Reconstruction to serve in that role. Abbott was sworn in on December 2, 2002, following John Cornyn's election to the U.S. Senate...
has filed suit against the company for “conducting an illegal scheme that defrauded Texans with financial problems.” The suit says that the firm not only charged its customers for services that were not delivered, but that since its debt settlement program forces customers to stop making payments to their creditors, many customers could face unexpected late fees, interest, more collection attempts, and even lawsuits by their creditors. The Attorney General has received more than 140 complaints against the firm in the past two years.
Lobbying
In 2009, the company spent $282,500 to lobby CongressUnited States Congress
The United States Congress is the bicameral legislature of the federal government of the United States, consisting of the Senate and the House of Representatives. The Congress meets in the United States Capitol in Washington, D.C....
and attain legislation favorable to the firm.
Media coverage
In July 2009, the ABC NewsABC News
ABC News is the news gathering and broadcasting division of American broadcast television network ABC, a subsidiary of The Walt Disney Company...
Nightline
Nightline
Nightline, or ABC News Nightline is a late-night news program broadcast by ABC in the United States, and has a franchised formula to other networks and stations elsewhere in the world. It airs weeknights, usually for 31 minutes. Created by Roone Arledge, the program featured Ted Koppel as its main...
program did an investigative story on Credit Solutions. In the piece, the reporter interviewed Heather Carmichael, the company’s director of operations. Carmichael was asked about the three separate state attorneys general (now five) that were suing Credit Solutions, and responded. "I wish there was an easy answer to that question. The industry is changing so rapidly. And there is more change to come.” She declined to comment further on the pending litigation except to say, "I can tell you that we are working diligently with them toward an acceptable solution."
Nightline asked her what percent of the firm’s clients pay their fees without having their debt settled by Credit Solutions. She responded, "That's a great question. I don't have that number, but I can certainly look at it for you." Carmichael has not provided that information to ABC News. New York Attorney General Cuomo said Credit Solutions settles debts for only 1 percent of its customers in that state. Credit Solutions posted a rebuttal to the ABC report on its website.
A March 2010, CBS
CBS
CBS Broadcasting Inc. is a major US commercial broadcasting television network, which started as a radio network. The name is derived from the initials of the network's former name, Columbia Broadcasting System. The network is sometimes referred to as the "Eye Network" in reference to the shape of...
Early Show story on the debt settlement industry criticized Credit Solutions of America's business practices, and provided consumer advice for debt settlement counseling.