AUSTIN -- An Austin debt settlement company is now barred from doing business in two states. Attorneys general in Oregon and North Carolina claim it misused thousands of dollars intended to settle consumers' debts.
It’s called World Law Debt, but it goes by several other names. Earlier this month, Oregon’s attorney general filed suit and obtained a restraining order, prohibiting the company from doing business in its state.
"These were just fraudulent business practices," explained Jeff Manning, a spokesperson for Oregon’s Attorney General’s office.
According to its lawsuit, hundreds of Oregon customers paid World Law Debt $1. 5 million, but only $275,000 went to creditors to settle debts.
The complaint accused World Law of committing "financial abuse" and charged consumer fees "that exceeded [state] limits."
In June, North Carolina’s attorney general made similar claims and also obtained a restraining orders against World Law Debt.
"[It] definitely felt unethical,” said Jason, who did not want his last named disclosed in KVUE’s story. He worked for a World Law Debt parent company for about two years.
“I'm basically lying to the person on the phone, telling them we can still make a plan, we can figure something out, knowing that in my head they're ultimately going to be sued by one of their creditors," Jason told the KVUE Defenders.
"I was late on two payments and I panicked. I said, I've got to do something, you know," explained Hope Jentis, an Oregon resident who signed up with World Law to get out of credit card debt.
She claims the company did not negotiate a settlement for her, “They never talked to my creditors."
World Law Debt declined on-camera interview requests, but sent us an email essentially claiming the company settles debts for customers through federal credit card arbitration rules. A company attorney says the laws the state attorneys general attribute don’t apply to them.
"All of the consumer debt cases that World Law handles involve credit card agreements providing for federal arbitration,” explained Brett James, a World Law Debt attorney.
Another World Law attorney, Karen Thomas, put it more bluntly. “These two states, unlike most states--did not talk to us and have no information. Most states discuss first so they know what they are doing. Oregon state officials oddly do not know even know that Federal Arbitration exists. They don't even know the concept, ”said Thomas.
Texas' attorney general office says it’s received ten complaints involving World Law Debt over the past few years. It has no immediate plans for a lawsuit.
Thomas also responded to Jason's claims. "If any staff person suggests a change, it is done if senior attorneys agree. We do not really have a preference for what clients and customers want. The non-bankruptcy options are for those that just do not want, or will not do..." wrote Thomas.
Jason says he's speaking out because he feels badly for the customers he couldn't help. "It's just sad to see what it's doing to them, knowing they were in there because they were in a bad spot, already and it's just getting worse," contends Jason.
Oregon and North Carolina also claim World Law lied to customers by falsely claiming it had attorneys representing consumers in their states.
World law told KVUE they do have attorneys, but they don't have to be located and licensed in every state since their cases deal with federal arbitration rules.