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Refund Checks Issued in Case Against Company that Advertised Debt Payment/Reduction Services for People with Credit Problems

MADISON - Wisconsin citizens who were misled by a debt payment reduction company for people with credit problems will soon be receiving a refund check in the mail.


JK Harris Recovery Systems advertised itself as negotiating debt payment reductions for people with credit problems. The company's business practices included fees that exceeded the consumer's total debt, and the collection of fees regardless of whether the consumer's debt was reduced.


"JK Harris took advantage of those needing help, offering assistance and often providing none," said Attorney General J.B. Van Hollen.


The Department of Financial Institutions (DFI), which regulates "adjustment service companies," ordered JK Harris to cease doing business in Wisconsin and to refund all customers their fees. JK Harris argued that it could not be regulated under those laws.


The Department of Justice took over the case when JK Harris appealed the DFI order to the circuit court, court of appeals and a petition to the Supreme Court. The circuit court and court of appeals upheld the administrative order and the Supreme Court denied review.


After the decision became final, JK Harris indicated that it was financially unable to comply with the refund aspect of the order. The Department of Justice negotiated a payment plan whereby claim forms were sent out in 2007 and JK Harris would pay $5,000 per month until there was enough money to satisfy all claims in full. The Department of Justice had a very high response rate on the forms (over 100 were filed). It has taken about a year to recover all of the money needed to cover the claims.


"I am pleased that we were able to negotiate a plan so that we can provide full refunds to Wisconsin consumers who did business with this company," said Attorney General Van Hollen.


The refund checks were sent out today. The average amount of refund is approximately $500. The amount of the refund represents the full amount an individual paid to JK Harris Financial Recovery Systems. The state's lawsuit did not involved JK Harris & Company, another JK Harris entity.


The state was represented by Assistant Attorney General Charlotte Gibson.