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For Immediate Release
November 22, 2005
Media Contact:
Kevin Enright 410-576-6357


Attorney General J. Joseph Curran, Jr. announced today that his Consumer Protection Division has entered into a settlement with Financial Freedom International, Inc., a Nevada-based credit counseling agency. Financial Freedom, through a licensee located in Montgomery County called Financial Freedom of Washington (aka New Freedom Corp.), offered credit counseling services and debt management services to consumers. Financial Freedom sold debt management services to consumers living throughout Maryland, but it primarily targeted Spanish-speaking residents of Montgomery and Prince George’s Counties through Spanish language radio, television and print advertisements that claimed Financial Freedom could reduce consumers’ monthly payments to their creditors.

In Maryland, only a nonprofit corporation can offer and sell debt management services. Debt management services are provided when a credit counseling agency receives monthly payments from consumers for the purpose of distributing the funds to consumers’ creditors at a lower monthly rate negotiated by the credit counseling agency.

The Division alleged that Financial Freedom, as a for-profit corporation, could not offer and sell the debt management services it offered and sold to consumers from 2000 to 2004. The Division also alleged that Financial Freedom misled consumers by failing to inform them that enrolling in a debt management plan could harm their ability to obtain consumer credit and by failing to inform them that the initial payments they made to enroll in the plan would not be forwarded to their creditors. Instead, the initial payments were used to pay Financial Freedom and its licensee. Financial Freedom denied that it had violated Maryland law.

Under the settlement the Division reached with Financial Freedom, the company agreed not to sell debt management services to Maryland consumers unless it first obtains a license to sell debt management services from the Maryland Department of Labor, Licensing and Regulation. Under the Debt Management Services Act, only a nonprofit corporation may be licensed to perform debt management services. Financial Freedom’s licensee went out of business several years ago and is not a part of the settlement.

Under the settlement, Financial Freedom also agreed to return the portion of the fees consumers paid for debt management services that it received. The Division estimates that more than 700 consumers will be receiving refunds that, in total, will exceed $200,000. The company also agreed to pay the Division $15,000 in costs and a $50,000 penalty, which increases to $150,000 if Financial Freedom breaches the settlement. Financial Freedom also agreed not to misrepresent its services, including its ability to provide services that it cannot lawfully perform.

" Maryland law requires credit counseling agencies to be nonprofits to ensure that they serve the consumers’ needs rather then the company’s profits," Curran said. "I am pleased that this settlement will provide restitution to consumers who experienced financial difficulties." The Attorney General also expressed his gratitude to the Montgomery County Office of Housing and Consumer Affairs, which assisted his Consumer Protection Division in conducting its investigation.

Consumers who have complaints about debt management companies may contact the Consumer Protection Division by calling (410) 528-8662 or the Commissioner of Financial Regulation at (410) 230-6100.



Attorney General of Maryland 1 (888) 743-0023 toll-free / TDD: (410) 576-6372
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