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DC Lender Agrees to Refund Money to Thousands of Consumers Under Settlement Agreement with District of Columbia

Friday, May 26, 2000

DC Lender Agrees to Refund Money to Thousands of Consumers Under Settlement Agreement with District of Columbia

(Washington, DC) DC-based lender Infinity Resources Group, Inc., has agreed to offer refunds to thousands of consumers across the US under a settlement resolving a lawsuit brought by District of Columbia Corporation Counsel Robert R. Rigsby. Last August, Corporation Counsel Rigsby charged that Infinity had misled consumers by offering, for a fee, a "Loan Commitment Letter" that did not represent an actual commitment to provide a loan. The Office of the Corporation Counsel estimates that, under the settlement, more than 10,000 consumers will be eligible to receive refunds totaling more than $2 million.

The settlement agreement also resolves charges that the District of Columbia filed last November against AmeriDebt, Inc., a national debt counseling organization based in Germantown, Maryland, that referred clients to Infinity. The Corporation Counsel alleged that, though AmeriDebt represented to consumers that it was a non-profit counseling organization, one of the primary purposes of its operations was to generate new business for Infinity.

Infinity has agreed to mail notifications to consumers who are eligible for refunds under the settlement. Under Infinity's loan program, consumers who paid an upfront fee to Infinity, and who then made six on-time monthly payments as part of AmeriDebt's debt management program, were eligible to apply to Infinity for a debt consolidation loan. The settlement agreement provides that a consumer who made an initial payment to Infinity of at least $210 and then made the six payments to AmeriDebt on time, but who never received approval for a debt consolidation loan, will be offered a refund of all fees paid to Infinity in excess of $200. Many consumers will be eligible for refund checks of more than $500.

Infinity and AmeriDebt have also agreed to be subject to a court order prohibiting false or unsubstantiated representations to consumers about their chances of obtaining a loan. In addition, Infinity will pay $100,000 in attorney's fees and costs to the District of Columbia government. In agreeing to the terms of the settlement, the companies have not admitted any liability or wrongdoing. The settlement agreement is in the form of a proposed Consent Order that is subject to the approval of the District of Columbia Superior Court.

The Office of the Corporation Counsel advises consumers needing help with credit or debt problems to look in the Yellow Pages under "Credit & Debt Counseling Services" for a non-profit counseling agency. A non-profit counseling agency will charge either a small initial fee (typically $5 to $30) or no initial fee for their services, and will not pressure a consumer to make a "donation" to cover costs. These agencies are usually able to cover most of their costs with money that they receive from creditors for helping customers to pay back their debts.

A consumer should be suspicious of any company that assures that it can arrange a loan or other form of credit, but then asks the consumer to pay a fee before the company has provided the loan or credit. If a consumer has bad credit or no credit, a legitimate lender will not guarantee or promise a loan before the consumer has submitted an application.

Media Contact: Leigh A. Slaughter, Special Deputy Corporation Counsel, (202) 724-5198.