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Watch out for get-out-of-debt schemes!
One of the largest debt negotiation scams in the United States has finally landed in hot water. On Wednesday, the Attorney General of Alabama, Troy King, and the Alabama Securities Commission announced the permanent shutdown of Allegro Law, LLC and Allegro Financial Services LLC.
The lawsuit was filed by King and the Securities Commission Director, Joe Borg, seven months ago. At the time, the suit halted operations and froze the assets of the company.
The main complaints received with regards to the company were its lack of effectiveness in reducing debts and its false representations. The Alabama Deceptive Trade Practices Act is a consumer protection law that has the aim of protecting consumers from unfair and deceptive trade practices. Allegro was found in violation of this Act by making false claims and providing misleading representations to consumers. The company advertised that the services provided would be supervised by an attorney. The company told customers to stop paying their debts, in hopes of making the debt "uncollectible" in the books of debtors, thus allowing for easier settlement. According to the complaint, this practice did not yield good results for customers.
Furthermore, customers made monthly payments to Allegro -- payments which they falsely believed were being applied to their debt and which were, in fact, being applied to the payment of Allegro's fees.
"People who were in desperate circumstances came to Allegro for help, and instead, they suffered greater harm," said King. King also mentioned that steps are being taken to compensate and restore those who were victims of Allegro. Former clients of Allegro will be contacted by the receiver, Louis Colley.