Consumer Finance Insights
January 30, 2017

CFPB Files Suit Against Debt Relief Attorneys

On January 30, 2017, the Consumer Financial Protection Bureau (CFPB) filed a complaint in the United States District Court for the Central District of California against several debt relief law firms and individual attorneys based in Orange County, California and Kansas City, Kansas.  The CFPB brought the action under the Telemarketing and Consumer Fraud and Abuse Prevention Act, 15 U.S.C. §§ 6102(c), 6105(d), the Telemarketing Sales Rule (“TSR”), 16 C.F.R. pt. 310, and Sections 1031(a), 1036(a)(1), 1054, and 1055 of the Consumer Financial Protection Act of 2010 (“CFPA”), 12 U.S.C. §§ 5531(a), 5536(a)(1), 5564, and 5581 in relation to the defendants’ marketing and sale of debt relief services.

The complaint alleges the debt relief attorneys and their firms operated “a debt relief scheme that collects exorbitant, illegal advance fees from vulnerable consumers suffering financial difficulties” by claiming that they can help settle consumers’ debts.  The CFPB further alleges that defendants received “millions of dollars of unlawful fees” through their debt relief operation, and “often” failed to settle debts. The complaint seeks injunctive relief, civil penalties, restitution, and consumer relief.

In its press release, the CFPB notes that defendants also assisted a debt relief company that the CFPB brought actions against in both 2015 and 2016.  Enforcement Watch covered the 2016 action here, and the 2015 action here.

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