(Adds Credit Solutions statement)
NEW YORK May 19 New York Attorney General
Andrew Cuomo sued two debt settlement companies for fraud,
deceptive practices and false advertising on Tuesday as part of
a probe of their treatment of consumers in the financial
CSA-Credit Solutions of America, Inc of Richardson, Texas,
which describes itself as the largest debt settlement company
in the United States, and Nationwide Asset Services Inc of
Phoenix, Arizona, were sued on behalf of about 20,000 New York
customers, Cuomo's office said in a statement.
"These companies are taking advantage of people in New York
and throughout the entire country who are facing tremendous
economic hardship," Cuomo said in the statement. "Today's
lawsuits send a clear message that we are prepared to rein in
this unregulated industry and protect New Yorkers who are
proactively trying to work their way out of debt."
The lawsuit charged that CSA promised a 60 percent
reduction in customers' outstanding debt, but only an average
of 1 percent of consumers received that savings. It said CSA
collected approximately $17 million in fees from New York
CSA said in a statement that it "disputes liability over
the complaints and supposed practices" which largely occurred
in 2007 during a 12-month period when the company was under
Chief Executive Doug Van Arsdale said the company was
disappointed with the action because it had "worked hard to
bring integrity and regulation to the industry. We are part of
The lawsuit against Nationwide in Buffalo, New York, said
the company promised a 25 percent to 40 percent reduction in
consumers' outstanding debt, but only one-third of 1 percent of
consumers received that savings.
"Customers suffered continued harassment and lawsuits by
creditors and had their credit ratings destroyed," the attorney
general's office said.
Nationwide said in a statement that its attorney had not
yet seen the lawsuit, and the company declined comment. It said
it had cooperated with Cuomo's investigation and supplied all
documents requested by his office.
On May 7, investigators subpoenaed 14 debt settlement firms
nationwide seeking information about their fee structures and
what kind of relief they are providing to consumers.
(Reporting by Grant McCool; Editing by Kenneth Barry)