CFPB Settles $25 Million Lawsuit with Debt Settlement Provider

On July 9, 2019, the Consumer Financial Protection Bureau (CFPB) announced that it settled its lawsuit against the nation’s largest debt-settlement services provider for allegedly engaging in deceptive debt-settlement acts or practices. The company agreed to pay $20 million in restitution to affected consumers and a $5 million civil money penalty.

In its complaint, the Bureau also alleged that the company violated the Consumer Financial Protection Act of 2010 (CFPA), 12 U.S.C. § 5531, 5536(a), by failing to settle consumers’ debts as promised, charging consumers after having them negotiate their own settlements with creditors, and misleading consumers about the company’s fees and the company’s ability to negotiate debts with all creditors.  The CFPB also alleged that the company violated the Telemarketing and Consumer Fraud and Abuse Prevention Act, 15 U.S.C. §§ 6102(c), 6105(d), Telemarketing Sales Rule (TSR), 16 C.F.R. § 310, by charging consumers advance fees and failing to inform them of their rights with respect to funds deposited with the company.  The stipulated judgment and order​ enjoins the company from engaging in the alleged conduct in the future, and further requires the company to formulate a compliance plan, conduct ongoing compliance monitoring, and abide by certain recordkeeping and reporting requirements.