Attorney General, DCP Announce $100,000 Settlement With Credit Counselor That Sent Deceptive Debt Notices

October 5, 2006

Attorney General Richard Blumenthal and Department of Consumer Protection (DCP) Commissioner Edwin R. Rodriguez today announced that J.K. Harris Financial Recovery Systems, LLC, will pay the state $100,000 and provide full restitution to settle allegations that it sent consumers deceptive debt notices to induce them to purchase credit counseling and debt resolution services.

The agreement settles a lawsuit that Blumenthal filed in January 2004 after the company sent letters to hundreds of consumers in New Haven, Meriden and elsewhere saying that a "judgment" had been "filed" against them by a municipality in a court of law for nonpayment of an unspecified debt. The letters, stamped "Final Notice," offered assistance in resolving the supposed court cases and paying off the alleged debts.

In many instances, there was no court case, judgment or debt.

"This company harassed consumers with bogus debts, scaring them into paying for protection from nonexistent court judgments," Blumenthal said. "This settlement provides 100 percent restitution to consumers who were terrified and tricked into paying for unneeded credit counseling and debt resolution services. Connecticut should have zero tolerance for unscrupulous debt collection practices."

"JK Harris played the knight in shining armor, riding in to save consumers from debt collection," Rodriguez said. "In reality, these consumers already had good credit. They were misled with bogus information and convinced to pay for unnecessary services. I am pleased that J.K. Harris has come to realize that its deceptive behavior is not acceptable in Connecticut, and I'm delighted that consumers will be getting all of their money returned."

Under the settlement, the 563 state residents who signed contracts with J. K. Harris Financial Recovery Systems may be eligible for 100 percent refunds of payments they made to the company. Consumers eligible for refunds will receive a claim form from the company in the next several weeks. Consumers with questions can contact the Attorney General's Office at (860) 808-5400.

J.K. Harris Financial Recovery Systems, LLC, also agreed to stop providing credit counseling in Connecticut, register as a Connecticut company and substantiate debts before it tries to collect them.

Of the $100,000, half will go to the state's general fund. The Attorney General's and DCP's consumer funds will split equally the remaining $50,000.