The Minnesota Attorney General filed lawsuits today against three out-of-state companies, accusing them of scamming consumers seeking help with debt problems.
Attorney General Lori Swanson is suing Priority Direct Marketing, Clear Financial Solutions, and Moneyworks LLC.
She says the companies charged consumers up-front fees, up to about $2,000, in exchange for help lowering consumers' credit card interest rates.
However, Swanson says the companies failed to deliver on their promises and did not refund fees. The companies could not be reached for comment.
Swanson says the companies seemed to know a lot about the consumers they targeted by phone.
"Many folks believe it's their bank. When they call up and say, 'Hey, we're card services/account services calling,' and they know who your credit card is, how much you owe, people think it's their bank trying to do them a favor," said Swanson. "So that is also a troubling aspect we hope to get to the bottom of through the lawsuits."
Rossie Anderson-Howze, a retired St. Paul resident, says she paid about $1,100 to Moneyworks to lower the 12.9 percent interest rate on her credit card. She says that never happened, and there was no recourse.
"They did not refund my money, nor would they let me cancel," said Anderson-Howze.
Attorney General Swanson warns that consumers should be wary of "fly by night" debt assistance companies.
She said she does not know the individuals who are running the companies, but will pursue court orders to identify them. She's asking the Federal Trade Commission to prohibit upfront fees for debt relief services.