By Kenneth Long on November 29, 2010

Government programs provide lots of assistance to those who are struggling financially. While some community agencies receive funds to help pay medical bills, it would be inappropriate to claim that medical bill grants are an actual service. Similarly, there are programs to help pay heating bills. Again, this is a social program put into place to help seniors and other low income families avoid life-threatening situations that may occur when their electricity or gas is cut off due to nonpayment. It is not a grant program.

What we frequently see are companies that try to make a few bucks off of desperate debtors. They make promises of federal grants used to pay off debt. In reality, they are talking about social programs and charge high fees just to provide the information to you. This is information you can get on your own for free.

What you cannot get is a grant to help you pay your debt. Consumer debt is a result of financial decisions that you have made in which you are expected to repay the lenders from which you have borrowed. There is no grant program to help you pay consumer debt.

The Federal Trade Commission announced that it reached a settlement with one company that was falsely claiming to help debtors obtain federal grants to pay off debt. In Deep Service, Inc. was investigated by the FTC, which found that the business deceived customers by promising free government grant money. The company operated websites under the names Grant$ For You Now, Grant One Day, and Easy Grant Access. Principals Ryan Champion and Joseph C. Fleming were found to be responsible for the fraud as well as unpaid federal and state taxes.

The company provided access to their "member's only" section after customers paid $1.99 for membership. The "member's only" section contained innacurate and obsolete information rather than the information that the company claimed to provide.

The false information was quickly brought to the FTC's attention when customers complained about illegal billing practices. Apparently In Deep Service was also charging one time fees of $19.12 and monthly fees of $72 to $95, all without prior disclosure to the customer. Additionally, their "100% No Hassle Money Back Guarantee" did was completely false as customers were frequently unable to cancel their memberships, stop the billing process and receive refunds.

Consumers who are having trouble paying consumer debt like credit cards and personal loans should contact a credit counseling agency for assistance. Their debt management programs are financially supported by many of the same creditors that provide benefits to eligible debtors.

By Kenneth Long on November 29, 2010

Robert Kardashian may have been an integral part of OJ Simpson's dream team, but I must admit I am surprised that his "fame" has somehow been carried on by his family. Their latest attempt to capitalize on his name is a prepaid MasterCard that carries their likeness. It is heavily marketed to teens and their parents as a way to control and monitor spending.

The Kardashian Prepaid MasterCard is designed to help parents provide an allowance to their teenaged children, while giving teens the independence of making purchases using their own cards. It is seen as a glamorous option for fashion conscious teens. Regulators however aren't happy about the predatory nature of the product's fees.

An annual fee of $99.95 plus monthly fees of $7.95 is an excessive fee structure for any plastic. There are additional fees for using the card at ATMs, speaking with an operator and termination of the account. Use the card for only 6 months and the upfront fee is $59.95.

According to Attorney General Blumenthal, "I am deeply disturbed by this card's high fees combined with its appeal to financially unsophisticated young adults." This he wrote to University National Bank president Jim Conrad.

University National Bank released its own statement prior to receiving the official notice from Blumenthal's office:

Depending on the findings of the investigation, the Connecticut attorney general office may pursue regulatory action against University National Bank if it determines that the fee structure violates state laws designed to protect consumers from "pernicious and predatory fees." It is likely that the investigation will be completed by Blumenthal's successor, George Jepsen, who was elected for the vacated office now that Blumenthal is moving to the Senate.

For consumers, keeping up with the Kardashian's could be a dangerous move, since most people don't have the same wealth and resources to maintain such a luxurious lifestyle. For those who insist on obtaining the Kardashian Kard, they should follow the Kardashian's on television so that they can see what they are paying for by using their Kard.

By Kenneth Long on November 24, 2010

Government Employees Credit Center (GECC) was instructed to stop approving new payday loans to West Virginia residents in 2007. Since that court order, GECC defied the court by issuing new loans. Furthermore, related collection agencies continued collection attempts on those payday loans in default even though they had been instructed to stop.

Owner Vincent Ney was cited as responsible for violations of the court order. GECC was charged with contempt. Related collection agencies owned by Jeffrey Weiss were also cited. These included PD Recovery, Inc. and Dollar Financial Group. Weiss' companies continued to collect on the barred debts even after the court order. GECC also continued making the loans in violation of that court order, triggering a $3,000 daily fine until they complied.

The lawsuit by the attorney general also mandates that all illegally issued payday loans by GECC be voided. The debts are no longer collectible by PD Recovery, Dollar Financial Group or any other collection agency that buys the debts.

If you live in West Virginia and have a payday loan outstanding, you should contact the office of the attorney general to see if it is legally collectible. Contact the Consumer Protection Division at 1-800-368-8808.

Attorney General Darrell McGraw continues his assault on illegal lending, collection and debt settlement practices by forcing compliance, issuing cease and desist orders to those that fail to comply, invalidating debts and fining violators. Any company operating in West Virginia that fails to comply with licensing and consumer lending guidelines is asking for an investigation by the Attorney General. If you believe that you have been victimized by one of these companies, contact the Attorney General to file a complaint. That is how GECC and other violators became the subject of investigation.

By Kenneth Long on November 23, 2010

Maryland regulators repeatedly warned a Kansas collection agency that it was illegally pursuing repayment for payday loans. Since the loans were illegal, Maryland prohibits collection attempts for those debts.

Maryland payday loan legislation restricts interet charged for short-term loans of less than $1,000. Those loans by law can carry interest rates no greater than 33% APR.

One Maryland resident was given a $300 payday loan for a period of less than two weeks. The interest charge of $90 amounted to a 995% APR.

The original warning came over a year ago. Smith Haynes & Watson was informed that since the loans that they were trying to collect on violated state usury laws, they were illegal. Subsequent attempts to collect on those loans are not legal within Maryland.

The loans were written by several unlicensed payday lending operations. One such company was East Side Lenders LLC. That Delaware company was investigated by Maryland regulators in 2008. The investigation found that the loans carried interest rates higher than allowed by statute. They also found that East Side Lenders was not licensed to do business in Maryland.

The cease and desist order against Smith Haynes & Watson is initially a temporary one. The collection agency has 15 days to appeal the suspension before the ban becomes permanent.

Maryland residents who took out payday loans carrying interest rates higher than 33% APR should consult the
Maryland Department of Labor, Licensing and Regulation regarding illegal collection attempts towards those debts. Maryland debtors who owe Smith Haynes & Watson for legal loans get a temporary reprieve. If the company fails to request and win a hearing, it may no longer collect on any debt owed by a Maryland resident. Of course, the company would likely just sell those debts to yet another debt collector, in which normal collections activities would likely resume.

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By Kenneth Long on November 22, 2010

After a multi-year investigation, the FBI has indicted six co-conspirators for a $32 million debt collection fraud that victimized 80 lawyers. The attorneys checked out the clients, the debtors and even validated the checks, only to find out later that the checks were counterfeit. This fact was learned only too late, since they had wired the funds to their "client's" bank in Asia.

The American Bar Association has already warned its members about the scam through its ABA Journal. A total of 80 attorneys were affected by the scam.

How it Worked

Attorneys were contacted by potential clients seeking help with the collection of a debt. This initial contact was usually by email. Lawyers were subsequently called by debtors who were prepared to own up to their debt. Some "debtors" were individuals, while others were companies. In one case, a $300,000 check was received in order to pay a debt.

Lawyers initially held the checks until they cleared, and then wired the proceeds to the clients' banks in Asia. Eventually the banks would discover that the checks were counterfeit. However, attorneys were notified of the fraudulent checks only after they had already wired the funds.

Attorneys affected in the scam were adamant that they had checked out the client as well as the debtor in each case. Scammers were prepared for this. The checks were drawn off real accounts, and the contact information was slightly altered so that the calls would go to a co-conspirator posing as a representative of the company rather than to the real corporation. If the law staff had looked up the contact information rather than using the fake information on the check, they might have discovered the fraud sooner.

Six people have been indicted in the scam. Initially, only the ringleader of the scam was in custody. Emmanuel Ekhator was detained by Nigerian authorities pending extradition to the U.S. for trial.

This is basically a new twist on an old scam. Anytime you accept a check from an individual or company, you trust that the check is legitimate and the funds are valid. Simply depositing the check into your bank account opens up the possibility of fraud, since all they need is your account number from the back of their cancelled check. Of course, most scammers avoid this approach since this puts them on the list of potential suspects.

The message is clear. Be careful about any arrangement that asks you to accept money and turn around and send it back out again. If you do investigate someone, obtain their contact information from public sources, not from the person or company you are researching.