Hundreds of Spokane-area clients of Freedom Debt Relief will benefit from a legal settlement announced today by Washington Attorney General Rob McKenna.
The agreement also resolves a class-action lawsuit filed in Spokane by Attorney Darrel Scott, whose office will oversee the return of $742,613 to about 570 clients of California-based Freedom Debt Relief.
The state settlement alleges the company overcharged 1,100 Washington residents for its services. Fees, which are limited to 15 percent of the total debt, were deducted from accounts set up to repay debt Freedom attempts to renegotiate.
The company denies the allegations, but agreed to the refunds and to pay $70,000 in state costs. The settlement was filed in King County Superior Court.
Freedom Debt stopped accepting new Washington clients in March 2009, when Scott filed a lawsuit in U.S. District Court in Spokane.
The company will have to alert the Attorney General's Office if it renews business in the state.
Scott said he will notify the District Court of the settlement Monday.
Consumers eligible for redunds will be notified by the court. Those who have already received refunds are not eligible.
"The two are hand-in-glove," Scott said of the state and class-action cases.