A Texas-based debt settlement company last week was accused of multiple violations of Oregon's Unlawful Trade Practices Act and has been banned from doing business in the state.
The Oregon Department of Justice and the Oregon Department of Consumer and Business Services obtained a court order banning World Law Debt and several affiliate companies. The state agencies sued the company for charging excessive fees and falsely claiming that it had Oregon attorneys on staff handling client cases. The complaint also alleged the company financially abused its customers who were older than 65.
The lawsuit alleges that of the $1.5 million World Law Debt collected from Oregon clients it paid just $275,211 to their creditors and retained more than $960,000 in fees. The state, which thus far obtained only a temporary restraining order prohibiting World Law Debt and its affiliates from doing business in Oregon, will seek a longer-term ban later this month.
World Law Debt came to Oregon in 2009 offering to help residents negotiate with creditors, work out payment plans and lower the amount owed, according to the complaint.
Customers authorized the company to take monthly withdrawals from their bank accounts, according to the complaint. The withdrawals were used to establish savings accounts for individual customers. When the consumer has saved enough, World Law claimed it would contact the creditors and negotiate a lump-sum payment or payment plan.
The state's Department of Consumer and Business Services (DCBS) fined World Law Debt $70,000 last September for failing to register before doing business in Oregon and other violations of the law. Oregon lawmakers enacted restrictions on the debt settlement industry in 2009, limiting the fees they charge and requiring they register with DCBS.
World Law Debt has not paid the fine, remains unregistered and has continued to operate, signing up at least a hundred new Oregon clients since it got fined, according to the lawsuit.
The Department of Justice is seeking more than $10 million in civil penalties, $25,000 for each of the 425 contracts the company entered into with Oregonians while it was not properly registered. The state is also demanding World Law Debt fully refund its Oregon customers.
Along with World Law Debt, several related entities are named as defendants. They include Swift Rock Financial, Orion Processing, World Law Group, World Law Direct, World Law Plan, World Law Processing, World Law Debt Assistance and several other similarly named companies.
Last month, World Law Group was banned from offering debt settlement services in North Carolina.