CFPB Enters Proposed Settlement Of Lawsuit Against Debt Settlement Company Alleging Deception Over Fees And Disclosures In Breach Of TSR And CFPA – Consumer Protection
United States: CFPB Enters Proposed Settlement of Debt Settlement Company Lawsuit Alleging Deception Over Fees and Disclosures in Violation of TSR and CFPA
May 25, 2021
Ballard Spahr LLP
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On May 17, 2021, the Consumer Financial Protection Bureau (“CFPB”) announced that it had entered into a settlement proposal for its lawsuit filed in Massachusetts federal district court against debt settlement company DMB Financial, LLC (“DMB”) alleging that the company has engaged in deceptive acts or practices in violation of the Telemarketing Rule (“TSR”) and the Consumer Financial Protection Act (“CFPA”) . the proposed order would impose a judgment of $ 7,700,000 against DMB, which would be suspended from the payment of $ 5,400,000 in restitution to consumers.
In his December 2020 complaint, the CFPB alleged that DMB engaged in deceptive acts or practices in conjunction with its fees and disclosures, violating both the TSR and the CFPA. In support of this assertion, the CFPB alleged:
DMB argued to consumers that it would not charge a fee for the services until payment was made to a creditor, but would collect a fee in cases where there was no settlement or if the consumer does not make a payment.
DMB requested and received a fee based on the amount of consumer debt at some point after they enrolled in the program, instead of the amount of debt at the time of enrollment.
DMB did not clearly and visibly disclose, prior to listing, the time frame within which DMB would make a good faith settlement offer to a consumer’s creditors.
In addition to paying a monetary remedy, DMB must refrain from any deceptive acts or practices alleged in the complaint regarding charges and disclosures, and may not use or obtain a consumer’s credit report except for purposes authorized in under the Fair Credit Reporting Act.
This action occurs shortly after a previous proposed command on April 13, 2021 with another debt settlement company, SettleIt, Inc., which also contained alleged violations of the TSR and CFPR. See our blog post about this order here.
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