On April 13, 2021 the Consumer Financial Protection Bureau (CFPB) announced that it reached a settlement with an online debt-settlement company to resolve alleged violations of the Consumer Financial Protection Act (CFPA), 12 U.S.C. §§ 5531, 5536(a), 5564, 5565, and the Telemarketing Sales Rule (TSR), 6 C.F.R. Part 310.
According to the complaint, the debt-settlement company helped consumers negotiate settlements with creditors, including creditors affiliated with the company. The CFPB alleges that the debt-settlement companies illegally steered consumers to take out expensive loans with those affiliated creditors and, in turn, collected debt-settlement fees from those loan proceeds.
The stipulated judgment was filed in the U.S. District Court for the Central District of California. If entered by the court, the proposed stipulated judgment the debt-settlement company will pay $646,769 in redress to affected consumers and a $750,000 civil penalty. Additionally, the proposed judgment requires compliance monitoring and prohibits the company from engaging in those steering practices subject to the settlement.