CHARLESTON -- Attorney General Darrell McGraw's office has announced it has reached settlements with three debt relief companies.

The settlements, according to a press release from McGraw's office, equal $214,000 in refunds for 226 state consumers.

The companies are Clear Financial Solutions of Orlando, Fla., and its owner, Chris Rubini; Financial Freedom of America, Inc. of Dallas, Texas; and Financial Solutions Legal Center, of West Palm Beach, Fla.

The three companies also agreed to discontinue providing debt relief services in West Virginia in the future.

The press release from McGraw's office said Alyson Rye of West Union was alarmed when a telemarketer from Clear Financial Solutions of Orlando, Fla., "repeatedly badgered her to accept his offer to reduce the interest rates on her credit card debt."

The telemarketer "even led her to believe that he had Chase Bank on the line and tried to negotiate an interest rate reduction," the release says. Chase later confirmed that no such call was made.

Clear Financial Solutions charged $999 to Rye's credit card bank, which prompted her to complain to McGraw's Consumer Protection Division. Her complaint and others prompted an investigation of Clear Financial Solutions.

Clear Financial Solutions offered a service known as "debt negotiation," in which consumers are promised a reduction in interest on their credit card debt for a one-time fee. Debt negotiation companies claim they try to generate savings by arranging balance transfers on new credit cards. Many consumers report that no services are provided.

In contrast, Financial Freedom of America and Financial Solutions Legal Center offered a service known as "debt settlement." In this approach, consumers stop making payments to the credit card banks and try to accumulate savings in an account that the debt settlement company will use to negotiate lump sum settlements of less than the amount owed on each account.

Most debt settlement companies charge substantial upfront fees, monthly service fees, and additional contingency fees based upon a percentage of the amount allegedly saved by a settlement. Consumers frequently complain that debt settlement companies settle few, if any, accounts, that they continue to receive calls from debt collectors, and are often sued by their creditors while they were enrolled in this program.

"Consumers who seek help with financial problems on the Internet or from high pressure telemarketers are more likely to find trouble rather than a solution to their problems," McGraw said in a press release. "My office urges consumers burdened with debt to contact local credit counseling agencies or West Virginia lawyers who are ethically obligated to advise consumers on all available options, including bankruptcy.

"Despite my office's concerns about their practices, I commend these companies for cooperating with our investigation and for taking the necessary steps to resolve our concerns."

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