West Virginia Record

Monday, September 23, 2019

McGraw settles with debt company

By Jessica M. Karmasek | Nov 5, 2010


CHARLESTON -- West Virginia Attorney General Darrell McGraw announced on Thursday the recovery of $169,400 in a settlement with debt management company Amerix.

The multi-state agreement resolves the attorney general's complaint that Amerix offered, sold and performed debt management services without the required state license and without first determining whether the services met consumers' financial needs.

Debt management services are provided when a credit counseling agency receives monthly payments from a consumer for the purpose of distributing the funds to the consumer's creditors.

The monthly rate is negotiated by the agency through a debt management plan, also referred to as a DMP.

In West Virginia, businesses that offer, sell or perform debt management services must be licensed by the state.

McGraw alleged that Amerix, a for-profit subsidiary of the Maryland-based AscendOne Corporation, misled customers to believe that they would receive debt management services from a nonprofit credit counseling company.

In fact, according to McGraw's office, many customers had little or no contact with a credit counselor, while others who enrolled in the company's debt management plans enjoyed no financial benefit.

The attorney general's complaint also alleged that Amerix hid behind a network of "shell" nonprofit agencies to charge consumers the higher rates allowed by state law for nonprofit agencies -- a 7 percent monthly maintenance fee, instead of the 2 percent allowed for-profit agencies.

With Thursday's agreement, Amerix agreed to halt the unlawful offer and sale of debt management services in West Virginia and will pay the settlement amount in installments over four years, according to McGraw's office.

The settlement further prohibits Amerix from misrepresenting its services as being performed by a nonprofit agency and directs it to reveal to customers the purpose of fees charged and the potential negative impact that entering into a DMP could have on a consumer's credit history.

McGraw's office said Amerix also may not enroll consumers into such plans unless the consumer can afford it and is provided with "meaningful" credit counseling.

In consenting to the court order filed Thursday, Amerix and AscendOne both denied they had violated any laws.

West Virginia was part of action by 19 states and the District of Columbia, led by Maryland Attorney General Douglas Gansler, that will result in a total payment of $4.5 million by the AscendOne companies to the states' attorneys general.

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