By Kenneth Long on May 22, 2011

Florida Attorney General Pam Bondi is investigating popular debit card issuers for possible deceptive and unfair business practices. Her office delivered subpoenas to Green Dot Corp., NetSpend Corp., First Data Corp., Account Now Inc. and Unirush Financial Services LLC, all issuers of prepaid debit cards.

The issue that is at hand is the failure of firms to properly disclose all fees that a customer could expect to pay. Prepaid debit cards are often utilized by customers shut out of the banking industry due to credit and prior banking problems. This less sophisticated clientelle often lacks the understanding of complex financial products and even more complicated fee schedules.

All five debit card issuers are being investigated for failure to properly divulge all fees clearly and conspicuously to clients. Account Now Inc and Unirush Financial Services LLC are additionally facing scrutiny due to claims the companies made that customers' credit scores would improve based on their use of the products. Bondi's office will be looking for evidence that the companies regularly reported positive information about their customers to at least one of the three main credit bureaus. Of course, prepaid debit card use normally is not reportable to credit bureaus as a tradeline, since no actual use of credit has occurred.

Prepaid debit cards are expected to become one of the fastest growing financial products. This is due to changes that may shut out many customers from traditional banking and lending products.

Banks have become more selective in how they lend due to new restrictions on fees and interest rate hikes. Even checking accounts are getting more expensive, which may push more low income customers to choose to become unbanked, thereby making prepaid debit cards an attractive option. MasterCard predicts that prepaid debit card usage could increase by over twenty fold over 2010 usage by 2017.

Bondi's office is sending a message that no financial sector is immune from consumer protection laws that require full disclosure of fees. For customers of these products, it shows that even prepaid debit cards can carry a number of fees that they may have been trying to avoid by shunning credit cards and checking accounts.

By Kenneth Long on May 5, 2011

Judge James Stucky ordered two collection agencies to cease all debt collection efforts in West Virginia until they become licensed with the state. The action is against Frontier Financial Group, LLC and Ezell Williams. The companies must also stop collecting payday loans, which are outlawed in West Virginia.

West Virginia has a ban on payday loans, and Attorney General Darrell McGraw upholds that ban whether the operation is a storefront loan company or an online lender. Furthermore, attempts to collect on payday loans obtained by West Virginia residents are illegal.

Since the debts are illegal, they are not eligible for collection efforts even if the collection agency is licensed to operate as a debt collector with the state. In this case, the debts were illegal and the collection agencies were illegally contacting debtors for the purpose of collecting on the debt, yet failed to obtain the necessary licenses in order to contact West Virginia debtors.

Frontier Financial Group, LLC is a debt collector based in Nevada. It's owners include Martin G. Mazzura, Salvatore Mazzura, and Paula Engelbrecht, all of Nevada.

Ezell Williams is a collection agency owned by Charles L. Dickey and Charles L. Dickey III. The agency and its owners are in Illinois.

Both debt collectors were attempting to collect defaulted debts that originated from payday loans online websites operated by Money & More. Money & More previously agreed to stop approving payday loan applications from West Virginia clients and to cancel all debts owed by them. Recent attempts to collect on debts sourced by Money & More are in direct violation of their April 17, 2009 agreement with the State.

Attorney General Darrell McGraw released the following statement regarding unlicensed companies that conduct business in West Virginia:


West Virginia residents who are being harrassed by debt collectors should contact the attorney general at 1-800-368-8808. Harrassment is illegal in any state, and collection of illegal payday loans is outlawed in West Virginia.

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Sound off in the forum: Have you been contacted by Frontier Financial Group?

By Kenneth Long on May 5, 2011

The Association of Settlement Companies (TASC) was arguably the most embattled trade association during 2010. Nearly all of their membership routinely included many now banned practices as a part of their everyday operations. TASC is trying to forget all that bad press by "reinventing" themselves as American Fair Credit Council (AFCC). The question is, are they truly inventing themselves or is this simply a renaming ploy in order to ditch their dirty laundry?

Who was TASC?

TASC was a trade association comprised almost entirely of advance fee debt settlement companies. These companies had long track records of making false and deceptive claims, unfair advertising and failing to fulfill their promises. The abuses were so widespread that the Federal Trade Commission updated their Telemarketing Sales Rule in order to ban debt settlement companies from charging any fee prior to completion of a settlement through their plan.

Faced with the task of actually having to earn their fees, many debt settlement companies shut down operations. TASC membership took a huge hit as many of its members decided they would be unable to operate fairly and still turn a profit.

TASC attempted to publicly support increased regulations to "clean up" the debt settlement industry. They issued multiple press releases after the new regulations were issued in order to appear as a champion of consumer protections.

Who is AFCC?

It remains to be seen who AFCC is. If they are simply a rebadged TASC, then consumers will still be taken to the cleaners. If they are serious about keeping a long-term positive image, then they will actually require that their members adhere to best practices. They will actually kick out noncompliant members from their association if they want to truly be the consumer advocate that they are projecting as their new image.

However, if AFCC continues to support "ways around" the regulations rather than best practices, then the association will continue to fail the consumers that they claim to protect. Some of the ways around regulations that have been discussed prior include:

• meeting clients at neutral locations to sign paperwork and avoid Telemarketing Sales Rule limitations
• relocating offshore to evade U.S. protections and regulations
• rent a lawyer agreements that allow for retainers for legal services, even though no lawyer actively works on the client's behalf

These destructive practices have been discussed at TASC's previous conferences. If AFCC embraces such foolery, then it will continue to fail to protect vulnerable consumers from fraudulent and deceptive practices performed by its membership.

By Kenneth Long on May 2, 2011

Arkansas Attorney General Dustin McDaniel filed suit against several companies owned by president Thomas Randall Wells. The charges include allegations that the companies regularly promised customers that all of their negative information could be removed through their credit repair service. Customers were also charged advance fees of $700-800.

First of all, credit repair firms cannot charge advance fees for their services. Under the Credit Repair Organizations Act (CROA), it is illegal for any firm to charge for credit repair prior to the services actually being performed.

Secondly, no firm may promise that all negative information can be removed from a credit report. Such claims are false, and any firm engaging in such advertising is committing fraudulent and deceptive acts.

Named in the lawsuit are Thomas Randall Wells and the companies that he owns: TRW Ventures LLC, TRW Ventures, Inc., TRW Credit Repair Experts, Inc. and TRW Credit Group LLP.

Dustin McDaniel released the following statement about the lawsuit:

The dispute process is incredibly simple for simple mistakes. Anyone who orders a credit report online (free through AnnualCreditReport.com) may dispute any of their credit records in one minute or less. There is no charge to do so, and easily verifiable mistakes will be corrected within 30 days. More complex disputes such as those which require you to submit corroborating evidence may be completed by mailing in a dispute letter and copies of proving documents within 30 days of ordering the credit report.

Most credit repair scams leave cheated customers with $300-400 less than they had without delivering the promised results. Wells' firms charged double that.

Since credit repair scams proliferate faster than regulators can shut them down, it is important for customers to understand the limitations of credit repair companies (Related post: How to Avoid Credit Repair Scams). Most would be much better off going to a credit counseling organization and getting help reviewing their credit report. Many programs offer free credit reviews. Those with a fee rarely charge more than $30 for the session. That way, you understand why records appear on your report and get guidance on removing erroneous data.

Debtors Unite would like to extend a special "thanks" to McDaniel's office for taking action. We can only hope that some restitution is actually made to victims of the scams. We expect that most of the revenues will be unrecoverable, as is normally the case in such schemes.

By Kenneth Long on May 1, 2011

The stock market is about financials, corporations, the economy and our belief about future events. So what does that have to do with Osama Bin Laden? The answer lies in the effect of his cowardly act on September 11, 2001, but it also is reflected in how our fellow citizens reacted to move on from this act of war and show the world that the U.S. is open for business.

America saw its population scared, angry, sad and on the defensive. Yet, our leaders took the offensive and declared that we would not be victims.

Save havens around the globe were eliminated. Taliban leaders in Afghanistan found that their decision to give Osama Bin Laden safe passage found out that they paid for their decision with their loss of their authority, their leadership and their lives.

President Barack Obama stated that operatives conducted the operation at his direction, and took out Osama Bin Laden upon discovery and confirmation of his location.

Since Bin Laden's greatest travesty created such global uproar, it is important to examine the impact of what he did to global markets. It is widely understood that the impact of the 9/11 actions caused irreparable harm to a number of U.S. and global corporations, not to mention the permanent impact on the families who lost loved ones.

Unfortunately, we expect that gains resulting from news of his death will be substantially dwarfed by news of his actions. Still, we cannot help but to be excited that one of the most notorious enemies of freedom has finally been removed from influence.

As a consumer protection organization that is committed to the protection of the American way of life, the strength of our economy, the influence of our leaders and the spirit of the American people, we are thrilled that justice has finally been served. Osama Bin Laden may have died in a firefight, but he died like the dog that he was. U.S. Navy Seals took him out during a helicopter operation in Abbottabad, Pakistan. That's a stone's throw from the capital of Islamabad.

Expectations are that simply the news of Bin Laden's death may be enough by itself to help nations, the corporations that employ us, and families that have been influenced in one way or another heal from the devastating acts that occurred nearly ten years ago. Mondays can be an interesting start to stock trading, but let us be asured that Monday, May 2 will be a great day in the markets. For those of us who never celebrated May Day outside of elementary school, let's remember May Day 2011! Thank you to our troops and our leaders, past and present!