Stephen Gibbons, Assistant District Attorney CONTACT PERSON:
Robin B. Wakshull, Deputy District Attorney
Consumer Protection Unit
(408) 792-2584 For release on August 26, 2004 ATTORNEY GENERAL AND DISTRICT ATTORNEYS SETTLE WITH DEBT MANAGEMENT PROVIDER AND TELEMARKETER Attorney General Bill Lockyer, Santa Clara County District Attorney George Kennedy, and Monterey County District Attorney Dean Flippo have announced the settlement of a civil enforcement action against two Florida corporations that marketed and sold debt management or debt consolidation plans to consumers in California. The complaint was filed against Integrated Credit Solutions, Inc, (“ICS”) a telemarketer, and Lighthouse Credit Foundation, Inc., a tax-exempt organization that provides credit counseling and debt management plans. All parties consented to the entry of a judgment that provides for over $1.89 million in consumer restitution, civil penalties and costs, and injunction provisions to prevent future violations. The judgment was signed today by Monterey County Superior Court Judge Robert O’Farrell. The complaint alleges that between January 2002 and January 2003, Lighthouse hired ICS to market, promote, and sell its debt management plans. A debt management plan involves an agreement by a consumer to have a third party negotiate new payment terms with his creditors. Thereafter, the debtor makes one monthly payment to the third party, who distributes the money to the participating creditors until the debt is paid off, usually in three to five years. Consumers pay a monthly administration fee to the third party. The complaint alleges that, during the time period in question, ICS left prerecorded telephone messages on answering machines urging consumers to call an 800 number to talk to a representative about the nonprofit’s program. The calls failed to disclose that in order to sign up with Lighthouse, ICS required the consumer to pay substantial up-front fees for enrollment services or for the purchase of ICS’s finance guide. The complaint further alleges that in the prerecorded messages and in subsequent person-to-person telephone calls, ICS made untrue or misleading representations, including statements that:
- The consumer had already been “approved” by a nonprofit agency.
- The consumer's interest rate after consolidation will be as low as 1.5%, 5.5% or 6.5%.
- The purchase of ICS’s Money Matters Toolkit is required by the consumer’s creditors as a condition of enrolling in Lighthouse’s debt management plan.
- The monthly fee charged by Lighthouse is the amount allowed by law and is tax deductible.