When in doubt, check it out
Research businesses carefully before signing the dotted line
By PAULA BARR
Daily Journal Staff Writer
Daily Journal Staff Writer
Published: Monday, September 28, 2009
Updated: Monday, September 28, 2009 11:08 AM CDT
Updated: Monday, September 28, 2009 11:08 AM CDT
St. Francois County resident Roseann Smith had used her credit cards a bit more than she should have, resulting in a total balance due of approximately $10,000.
When she received a call from a woman offering to provide help in settling her debts, Smith accepted.
“I had several places call,” she said. “This one sounded legit, that it would be able to help me. I agreed on the phone.”
The call has raised some questions.
The caller said she was with Morgan Drexen, a firm in California that works with attorneys who handle debt settlements. The woman sent Smith a contract with a California attorney’s name on one of the sheets.
However, a spokesman for Morgan Drexen said his company does not do telemarketing and would not have initiated the call.
“We do not contract with the consumers,” said Jeff Katz, general counsel with Morgan Drexen “Any debtors that we get involved with are contracted with attorneys.”
The company has had problems with impostors claiming to be from their company, Katz said. Impostors, however, don’t follow up with a contract.
Smith said she has never spoken to the lawyer on the contract or to any other attorney about debt settlement. She also said she did not receive an orientation that Katz said clients receive to make clear the terms of the contract.
Whomever the caller represented, she told Smith that they would negotiate with her credit card companies to pay off the accounts for less than she owed. However, the first $800 she sent them in monthly payments of $139 would go to the company, not to the credit card bills.
Smith sent the money each month, thinking that the company would start negotiations with the credit card bills. This month’s payment brought the total to $973, $173 of which she believed would go to credit card bills.
Meanwhile, the credit card companies were hounding Smith because they were not being paid. With each passing month, the interest accumulated and Smith grew deeper in debt. Her unease increased when a relative checked on the company and found the Better Business Bureau had given the company an “F” for its service rating.
Smith canceled the service, but said she was told she would not receive a refund. She countered by putting a stop to automatic payments from her bank account.
When told that Smith feared she was being scammed, Katz asked that she call him directly to resolve the situation. Citing attorney client privilege, he said he could not discuss an individual case without the client’s permission.
Katz admitted that some debt settlement offers are scams. However, his company legitimately works with attorneys and strengthens their bargaining position, he said.
Credit card companies are often reluctant to negotiate settlements with credit card holders because the offer might be an empty promise not backed by the money to meet the settlement terms, Katz added. The screening process and other services Morgan Drexen offers are an assurance to collection agencies that the settlement will be a legitimate offer, he stated.
“The money from debtors is put into an attorney-client trust account,” he said. “When the money builds up, creditors are approached in an effort to settle debt.”
Meanwhile, the credit companies are not paid, which typically increases their interest in negotiating a settlement.
In two Missouri complaints against the company, however, the clients said they were taken to court by creditors even though Morgan Drexen was helping to get a settlement. Those two complaints were settled, said Nancy Gonder, a spokesman for Missouri Attorney General Chris Koster’s office. A third complaint about the terms of the contract is in mediation, she said.
The BBB gave Morgan Drexen an “F” rating based on questions about the company’s reliability. “...they have failed to respond to complaints, their advertising is grossly misleading, they are not in compliance with the law’s licensing or registration requirements, their complaints contain especially serious allegations, or the company’s industry is known for its fraudulent business practices,” according to the BBB site, http://www.la.bbb.org/Business-Report/Morgan-Drexen-100054427.
Among the BBB’s concerns about the company are failure to obtain a required competency license, numerous complaints filed against the business, failure to respond to complaints filed against this business and a lack of sufficient background information on the business.
People who complained about the company alleged unfulfilled contracts, and inability to obtain refunds for when services are not performed. Some customers complained that although monthly deductions are automatically withdrawn from their bank accounts, their debts remain unsettled, and their creditors continue to contact them.
Katz said the rating does not take into consideration the ratio of complaints to number of clients, the type or degree of the complaint, or the age of the company.
“We’ve only been around for two-and-a-half years, and that hurts us,” he said. “We plan to be around for the long term.”
The company has not failed to respond to any complaint and the attorneys with whom they work are licensed by their respective states and are in good standing, Katz related.
He added that Morgan Drexen is a legal support company, not a debt settlement company,” Katz said. “But that is how the BBB classifies us.”
Some unscrupulous debt settlement companies have given all of them a bad reputation, Katz said.
“We’re stuck sharing the reputation of some of the bad players in this field,” Katz said. “The president of our company is a former Federal Trade Commission prosecutor and former assistant attorney general in Florida. He spent his career prosecuting scams.”
On Friday, Katz pulled up the contract with Smith and said it was legitimate. Smith planned to speak with him by phone.
Consumers should be wary of making any decisions based on an unsolicited phone call, and should check into a company’s reputation and services before agreeing to a contract. Even when a company is legitimate, consumers owe it to themselves to be clear about and comfortable with the terms of the contract before signing.
Check it out if you have any suspicions. If the company is legitimate and meets your needs, your research will eliminate doubts.
And if the offer is, indeed, a scam, you have saved yourself a great deal of grief.
The Daily Journal has made a commitment to keep readers abreast of scams that hit our area. If someone tries to make you the victim of a scam, call us at 431-2010 and tell us what happened. We will include your story in our scam alert series to prepare others who may find themselves in the same situation. The Daily Journal will run Scam Alert stories in the paper every Monday.
When she received a call from a woman offering to provide help in settling her debts, Smith accepted.
“I had several places call,” she said. “This one sounded legit, that it would be able to help me. I agreed on the phone.”
The call has raised some questions.
The caller said she was with Morgan Drexen, a firm in California that works with attorneys who handle debt settlements. The woman sent Smith a contract with a California attorney’s name on one of the sheets.
However, a spokesman for Morgan Drexen said his company does not do telemarketing and would not have initiated the call.
“We do not contract with the consumers,” said Jeff Katz, general counsel with Morgan Drexen “Any debtors that we get involved with are contracted with attorneys.”
The company has had problems with impostors claiming to be from their company, Katz said. Impostors, however, don’t follow up with a contract.
Smith said she has never spoken to the lawyer on the contract or to any other attorney about debt settlement. She also said she did not receive an orientation that Katz said clients receive to make clear the terms of the contract.
Whomever the caller represented, she told Smith that they would negotiate with her credit card companies to pay off the accounts for less than she owed. However, the first $800 she sent them in monthly payments of $139 would go to the company, not to the credit card bills.
Smith sent the money each month, thinking that the company would start negotiations with the credit card bills. This month’s payment brought the total to $973, $173 of which she believed would go to credit card bills.
Meanwhile, the credit card companies were hounding Smith because they were not being paid. With each passing month, the interest accumulated and Smith grew deeper in debt. Her unease increased when a relative checked on the company and found the Better Business Bureau had given the company an “F” for its service rating.
Smith canceled the service, but said she was told she would not receive a refund. She countered by putting a stop to automatic payments from her bank account.
When told that Smith feared she was being scammed, Katz asked that she call him directly to resolve the situation. Citing attorney client privilege, he said he could not discuss an individual case without the client’s permission.
Katz admitted that some debt settlement offers are scams. However, his company legitimately works with attorneys and strengthens their bargaining position, he said.
Credit card companies are often reluctant to negotiate settlements with credit card holders because the offer might be an empty promise not backed by the money to meet the settlement terms, Katz added. The screening process and other services Morgan Drexen offers are an assurance to collection agencies that the settlement will be a legitimate offer, he stated.
“The money from debtors is put into an attorney-client trust account,” he said. “When the money builds up, creditors are approached in an effort to settle debt.”
Meanwhile, the credit companies are not paid, which typically increases their interest in negotiating a settlement.
In two Missouri complaints against the company, however, the clients said they were taken to court by creditors even though Morgan Drexen was helping to get a settlement. Those two complaints were settled, said Nancy Gonder, a spokesman for Missouri Attorney General Chris Koster’s office. A third complaint about the terms of the contract is in mediation, she said.
The BBB gave Morgan Drexen an “F” rating based on questions about the company’s reliability. “...they have failed to respond to complaints, their advertising is grossly misleading, they are not in compliance with the law’s licensing or registration requirements, their complaints contain especially serious allegations, or the company’s industry is known for its fraudulent business practices,” according to the BBB site, http://www.la.bbb.org/Business-Report/Morgan-Drexen-100054427.
Among the BBB’s concerns about the company are failure to obtain a required competency license, numerous complaints filed against the business, failure to respond to complaints filed against this business and a lack of sufficient background information on the business.
People who complained about the company alleged unfulfilled contracts, and inability to obtain refunds for when services are not performed. Some customers complained that although monthly deductions are automatically withdrawn from their bank accounts, their debts remain unsettled, and their creditors continue to contact them.
Katz said the rating does not take into consideration the ratio of complaints to number of clients, the type or degree of the complaint, or the age of the company.
“We’ve only been around for two-and-a-half years, and that hurts us,” he said. “We plan to be around for the long term.”
The company has not failed to respond to any complaint and the attorneys with whom they work are licensed by their respective states and are in good standing, Katz related.
He added that Morgan Drexen is a legal support company, not a debt settlement company,” Katz said. “But that is how the BBB classifies us.”
Some unscrupulous debt settlement companies have given all of them a bad reputation, Katz said.
“We’re stuck sharing the reputation of some of the bad players in this field,” Katz said. “The president of our company is a former Federal Trade Commission prosecutor and former assistant attorney general in Florida. He spent his career prosecuting scams.”
On Friday, Katz pulled up the contract with Smith and said it was legitimate. Smith planned to speak with him by phone.
Consumers should be wary of making any decisions based on an unsolicited phone call, and should check into a company’s reputation and services before agreeing to a contract. Even when a company is legitimate, consumers owe it to themselves to be clear about and comfortable with the terms of the contract before signing.
Check it out if you have any suspicions. If the company is legitimate and meets your needs, your research will eliminate doubts.
And if the offer is, indeed, a scam, you have saved yourself a great deal of grief.
The Daily Journal has made a commitment to keep readers abreast of scams that hit our area. If someone tries to make you the victim of a scam, call us at 431-2010 and tell us what happened. We will include your story in our scam alert series to prepare others who may find themselves in the same situation. The Daily Journal will run Scam Alert stories in the paper every Monday.
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