CFPB Settles with Online Debt-Settlement Company for Alleged CFPA and TSR Violations

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.​