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Saturday, November 6, 2010

MCDANIEL SUES DEBT MANAGEMENT COMPANY: AscendOne Corp. agrees to Consent Judgment with Arkansas, other states

MCDANIEL SUES DEBT MANAGEMENT COMPANY: AscendOne Corp. agrees to Consent Judgment with Arkansas, other states

LITTLE ROCK -- Attorney General Dustin McDaniel announced today that he has filed suit in Pulaski County Circuit Court against a Maryland-based company, its subsidiaries and the owner of the companies alleging that the defendants violated Arkansas consumer protection laws in the marketing and sale of debt management services.

At the same time, the parties presented the Court with an agreed Consent Judgment to resolve the allegations made by the Attorney General. Under the Consent Judgment, the defendants will pay the state $169,400.

The defendants are identified as AscendOne Corp., and subsidiaries Amerix Corp., CareOne Services, Inc., FreedomPoint Financial Corp. and 3C, Inc., as well as Bernaldo Dancel, the owner of the companies. Similar suits and consent judgments were filed Thursday by 19 other states and the District of Columbia.

"These defendants will be required now to inform customers about costs associated with debt management services and the fact that such plans could have a negative impact on credit scores," McDaniel said. "We hope that this action, along with the recent changes in Federal Trade Commission rules related to debt negotiation offers, will assist consumers in avoiding deals that sound good, but lead only to deeper debt troubles."

Debt management services are provided when a credit counseling agency receives monthly payments from consumers for the purpose of distributing the funds to consumers' creditors at a monthly rate negotiated by the credit counseling agency through what is known as a debt management plan.

In the state's lawsuit, the Attorney General alleged that AscendOne misled consumers by representing that the debt management services it offered would be performed by a non-profit credit counseling agency when, in fact, AscendOne, a for-profit entity, performed the services. McDaniel also alleged that AscendOne represented to consumers that they would receive credit counseling when, in fact, many consumers had little or no contact with a credit counselor. The Attorney General also alleged that some of the consumers that AscendOne enrolled into debt management plans could not, and did not, benefit from the plans.

The companies and their owner denied that they violated any laws, but agreed to the relief provided in the Consent Judgment filed Thursday. The Consent Judgment prohibits the defendants from misrepresenting that their services are being performed by a non-profit, the purpose of the fees they charged, and the impact entering into a debt management plan could have on a consumers' credit rating. The Consent Judgment also provides that AscendOne and Dancel cannot enroll consumers into debt management plans unless they first determine that a consumer can afford the plan and provide the consumer with meaningful credit counseling.

The Attorneys General of Arizona, California, Delaware, District of Columbia, Idaho, Indiana, Maryland, Massachusetts, Missouri, Montana, Nevada, New Mexico, North Carolina, Ohio, Oregon, Pennsylvania, Tennessee, Texas, Washington and West Virginia also participated in the investigation and settlement.

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