Debt-reduction offers
attract state inquiryA Kauai-based firm promises
to eliminate credit obligations
Claims made by a Kauai-based company that promise to erase debt using legal loopholes have sparked an investigation by the state Office of Consumer Protection.
ISA Debt Relief, based in Kapaa, billed itself as a legal alternative to debt consolidation and bankruptcy in a press release picked up by CBS Market Watch and E-releases.
The company is just one of hundreds of Internet-based businesses that now offer those services, attracting the scrutiny of national and state consumer advocates and commerce agencies.
Run by President Terry Robinson, ISA asserts that a clean credit history and debt-free existence is just a few letters away for most consumers. Loan reviews could release them from their obligation to pay debts to banks and credit card companies that did not disclose all the terms of their loans up front, Robinson said.
"The Office of Consumer Protection is concerned about the claims made in this advertisement and will investigate," said Steve Levins, of the state Office of Consumer Protection.
Consumers need to be cautious about investing their money in any service that guarantees it can erase or eliminate debt without first reviewing their individual financial situation, he said.
If Hawaii's consumer watchdogs determine ISA has committed a deceptive or unfair trade practice, the company could face civil penalties. The Consumer Protection office can issue warning letters, file lawsuits, seek injunctive relief or collect monetary penalties ranging from $500 to $10,000 per violation, Levins said.
"In the past, some cases have resulted in millions of dollars' worth of penalties," he said.
When told his company was under investigation, Robinson blamed the scrutiny on a conspiracy theory.
"The lawmakers and banking institutions are in bed together," he said, maintaining the legitimacy of his services.
ISA's debt-elimination process is based on information found in the Fair Debt Collections Practices Act, the Fair Credit Billing Act and the Uniform Commercial Code, Robinson said.
ISA customers pay an upfront fee of about 10 percent of their total debt to receive advice and materials that explain how to use loopholes to get out of paying their obligations, he said.
But most of these companies are frauds, said William Kerr, a national bank examiner with the U.S. Office of Comptroller of the Currency.
"The concept they are using is not valid and has no basis in fact or finance," Kerr said. "It's basically an upfront-fee scheme."
Kerr said he is unaware of any individual who has successfully gotten their debts eliminated by using this process against a creditor.
Robinson, whose company is not registered as a business in Hawaii, said the services he offers are legal and are an offshoot of parent company Bountiful Harvest Mission, based in Hayesville, N.C.
Through Bountiful Harvest, ISA has helped more than 2,000 people, mostly on the mainland, get out of paying about $20 million in loans during the last three years, Robinson said.
"We've never had any complaints," he said, but failed to produce any satisfied customers.
"The kind of people this attracts are the kind of people that really value their privacy," Robinson said. "They don't necessarily want to broadcast what they've done."
Robinson described the business structure of Bountiful Harvest as being similar to a church or private club. The business is not registered in North Carolina, although nonprofits that solicit money are required to register by state law, said Noelle Talley, spokeswoman for the North Carolina Attorney General's Office.
Robinson provided a toll-free number for North Carolina owners Chris and Sara Goodwin, but the number rings to an anonymous answering service. Callers who enter a special code can hear a pre-recorded sales pitch from the Debt Forgiveness Center.
The Debt Forgiveness Center did not return calls to the Star-Bulletin. The principals elected not to talk to the newspaper because they were concerned about attracting negative publicity, Robinson said.
The Smokey Mountain Sentinel, the Clay County Sheriff's Department and officials from the North Carolina Attorney General's Office said they had not heard of the debt-elimination organization and had not received any complaints.
However, investigators from multiple agencies in Hawaii and North Carolina said it is only a matter of time before consumers start making complaints about debt elimination companies.
"This is the new Nigerian scam," Kerr said.