Debt Solutions? Firm offers only problems
Debt Solutions Inc. apparently has never stopped doing what it does best, ripping off consumers.
Despite an agreement signed with Washington authorities two years ago in Spokane, the company and its affiliates — DSI Financial Inc., DSI Direct Inc. and Pacific Consolidation Services Inc. — have continued to sell a bogus debt-reduction program. Hundreds, if not thousands, of individuals around the United States have paid as much as $629 for the plan. They were told, among other things, that company counselors could negotiate credit card interest rates as low as 6.9 percent. Maybe 4 percent. Even 2 percent, if that’s what it took to make the sale.
Follow the company’s plan, the counselors/telemarketers said, and the savings could amount to at least $2,500.
Over a lifetime, maybe.
In fact, according to documents filed in U.S. District Court earlier this month, DSI negotiated lower interest charges for only a few customers. Usually the rate reduction was less than 1 percent, not nearly enough to generate meaningful savings for debt-ridden consumers. For most, the “plan” they received amounted to nothing more than a computer printout showing how they could save the $2,500 if they increased their monthly payments. Well, duh.
In a consent decree signed in August 2004, DSI officials admitted no wrongdoing, but agreed to stop making some misrepresentations about the company program. Sales representatives would no longer browbeat consumers, who would specifically be informed of their right to cancel their purchase. The company also agreed to give the state a list of everyone who bought the plan, all of whom would have the opportunity to get their money back.
Jack Zurlini Jr., the Spokane-based assistant Washington attorney general who negotiated the decree, says the result was about $300,000 in customer refunds. Also, DSI agreed to pay the state $35,000 in attorney fees, and a $250,000 fine, with $225,000 of that suspended.
DSI stopped contacting Washington residents, but the consumer complaints kept on coming, Zurlini says, and not just to the state. The Federal Trade Commission got involved because DSI was not only trampling on consumer protection laws, its representatives also were calling people who had put their names on the National Do Not Call Registry. The agency has 600 complaints about DSI in its files. Except for a single area code in California, the company did not even bother to obtain the do-not-call lists, for which it would have had to pay a fee.
“It was essentially a national problem,” Zurlini says. “We never stopped receiving complaints about them.”
The plans were sold out of a call center on North Washington until last July, when Washington operations were shifted to Federal Way. There are other call centers in Florida, Georgia and the Philippines. But DSI, or at least its Washington affiliates, was apparently planning to skedaddle to British Columbia when, on March 1, Canadian customs agents at Blaine intercepted a U-Haul truck full of company records and furnishings. The driver was David Schwartz, manager of a DSI affiliate. Schwartz was sent packing south, but Canadian and U.S. customs detained the suspicious records.
The run for the border so alarmed state and federal officials they were in court just a few days later seeking not only a restraining order against DSI and its affiliates, but also a freeze on the assets of the company and its owners. And they wanted the order sealed until everyone involved was served.
The judge declined to issue the order, or impose an asset freeze, but there will be a hearing tomorrow in Seattle on the government motions.
DSI attorney Don Kellman said Thursday that his clients did not violate the August 2004 consent decree.
“They have done absolutely everything that the state of Washington asked of them,” he said. “We absolutely deny the allegations made in the complaint.”
But if the flight of David Schwartz is any clue, DSI was clearly over the line.