By Shelley Kofler, KERA News
http://stream.publicbroadcasting.net/production/mp3/kera/local-kera-838663.mp3
Austin, TX – Texas Attorney General Greg Abbott has charged two North Texas companies with orchestrating fraudulent debt settlement schemes. The charges come as lawmakers in Austin propose ways to regulate the industry. KERA's Shelley Kofler has more about allegations the companies promise relief they cannot deliver..
Attorney General Greg Abbott charged BC Credit Solutions of Mesquite, FH1 Financial Service of Dallas, and two other companies with operating fraudulent debt settlement schemes. Abbott said the companies exaggerated their abilities when they promised to eliminate consumers' credit card debt within three years.
Abbott: They exaggerated representations about their ability to reduce the debt of people they claim to be helping out. They misrepresented other debt settlement options such as bankruptcy.
The attorney general wants to fine the companies and force them to pay restitution to consumers who were harmed. He says the companies may actually have increased their clients' financial risk by inviting late fees, finance charges and lower credit scores.
Abbott: The reality they may not be saving a penny they may be paying a whole lot more
At the state capitol, a House committee is faced with fierce lobby pressure as it considers regulating debt settlement companies. They currently are not licensed in Texas; aren't required to be bonded or have insurance; and don't have to disclose the identity of their owners or employees. -
Anchia: There are a lot of cowboys out there and they are taking advantage of a lot of people who are between a rock and a hard place.
State Representative Raphael Anchia of Dallas is sponsoring a bill that would crack down on unregulated debt service companies but it must be voted out of a House committee by Saturday or it will die.
While it appears the full package won't move forward, committee chair Vicki Truitt of Keller thinks there's chance for a compromise.
Truitt: Just the process of registration I think will help us get a handle on the good actors and the bad actors.
Truitt says that would be the beginning of protecting Texans struggling with debt