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Commerce Commissioner orders Legal Helpers to pay $187,500 in restitution to Minnesota consumers

June 30, 2014

For Immediate Release:

SAINT PAUL, MN – The Minnesota Department of Commerce consent order signed recently requires Chicago-based Legal Helpers Debt Resolution, LLC (LHDR) and its subsidiaries to pay Minnesota consumers $187,500 in restitution for unauthorized and unregistered debt settlement in Minnesota. Legal Helpers also was ordered to pay a $25,000 settlement to the state of Minnesota for its violations of law. 

“Legal Helpers scammed Minnesotan consumers when they were desperately trying make ends meet to achieve financial stability,” said Commerce Commissioner Mike Rothman. “Instead, they defrauded our consumers, making their financial situation worse, which will not be tolerated in our state.”

The Commerce Department investigated multiple allegations that Legal Helpers repeatedly misled consumers throughout the debt settlement process, charging consumers much higher fees than what Minnesota law allows, all without a license to conduct debt settlement work.  Legal Helpers allegedly accepted thousands of dollars in up-front and monthly fees from individual consumers with the expectation that these funds would be used, in part, to settle claims with various creditors.  

In one complaint, Legal Helpers allegedly withdrew $1,065 per month from a Minnesota couple’s bank account.  For more than a year, the couple reported that Legal Helpers virtually ignored their case refusing to provide updates explaining how their money was being spent.  Eventually, the consumers reported that it was apparent Legal Helpers was not reducing or settling their debt as they continued to receive collection notices culminating with the threat of legal action by their collectors.

The investigation by the Minnesota Department of Commerce revealed that Legal Helpers allegedly purported to Minnesota consumers that its debt settlement services were being handled directly by its staff and attorneys. Instead, the work was allegedly shopped out in a joint scheme to the following list of unlicensed debt settlement service providers to be handled by non-attorneys: CDS Client Services, Inc. (“CDS”), Lynch Financial Solutions, Inc. (“Lynch”), Legal Services Support Group, LLC (“LSSG”), JEM Group, Inc. (“JEM”) American Debt Services (“ADS”), and Eclipse Financial Services, Inc. (“Eclipse”)

Were you a Client of Legal Helpers?

The Commerce Department is in the process of contacting affected consumers and has sent information on how to obtain restitution payments to individuals who did business with Legal Helpers or one of their affiliates.  If you were a customer of Legal Helpers and believe you are owed restitution, but did not receive notice from the Department please visit the Commerce website  for more information or call our Consumer Response Team at 651-539-1600.  

In addition to providing customer information and paying restitution, Legal Helpers and its subsidiaries have been ordered by the Commerce Department to stop conducting business in Minnesota altogether. 

Tips for Consumers:

  • Before enrolling with a debt settlement company, check with the Minnesota Department of Commerce License Lookup Tool to see if the Debt Services Company is licensed to operate in Minnesota. 
  • If possible, choose an agency that offers face-to-face services and avoid services that operate exclusively over the phone or internet. 
  • Get all debt service agreements in writing and read the agreements before you sign them. 
  • Avoid companies that require high up-front fees, “voluntary contributions”, or high monthly service fees.
  • Remember, debt service agencies are only allowed to charge fees that are statutorily allowed under Minnesota law.
  • Make sure you know when and how much of your monthly payment is going to your creditors. 
  • Beware of unrealistic promises, such as erasing your debt for pennies on the dollar in a short period of time (most legitimate debt reduction plans take two to four years to repay) or promises to reverse a bad credit score. 
  • Know that there are several free, reputable loan counseling services out there. 

About the Minnesota Department of Commerce 

The Minnesota Department of Commerce licenses and regulates debt settlement companies, collection agencies and individuals and companies in several other industries. Consumers with complaints or questions may call the Minnesota Department of Commerce at (651) 539-1600 or toll free, 800-657-3602.