Blog Enforcement Watch September 16, 2015

CFPB Obtains Preliminary Injunction Against Debt Relief Providers

​On September 15, the Consumer Financial Protection Bureau (CFPB) announced that the U.S. District Court for the Southern District of Florida had issued two preliminary injunctions against affiliated national debt relief providers and their officers stemming from a lawsuit filed by the CFPB alleging that the debt relief providers misrepresented the nature of their servicers, and charged illegal exorbitant and upfront fees for debt relief services.  Enforcement Watch previously reported on February 5 that the Colorado Supreme Court had affirmed a preliminary injunction against many of these same providers and officers.

The CFPB’s complaint, filed on August 17, alleged that the debt relief providers violated the Consumer Financial Protection Act (CFPA) and Telemarketing and Consumer Fraud and Abuse Prevention Act (TSR) by allegedly (1) representing that they provided “legal services” to avoid the TSR’s prohibition on upfront debt relief service fees, when in fact no legal representation was ever provided; (2) promising consumers that they will be able to repay less than what is owed on their debt; and (3) misrepresenting to consumers that attorneys participated in the debt relief provider’s services.  The U.S. District Court for the Southern District of Florida found that there was good cause to believe that immediate and irreparable harm would result absent the injunction.  The preliminary injunction orders prohibited the debt relief providers from providing or advertising any services or products or collecting any fees, required the providers to disable their website, imposed asset retention requirements, and imposed a receiver to act as an agent of the court.