On August 19, 2019, the Colorado Attorney General (AG) announced that it had reached a settlement with two financial services firms, resolving allegations that the firms had violated Colorado consumer protection laws. Between 2017 and 2019, one of the firms – a lender operating in the state – made numerous loans to the clients of a debt reduction service provider. However, both the lender and the debt reduction service provider were owned and operated by the same individuals. The AG alleged that this arrangement created a conflict of interest and was prohibited under Colorado law.
Refunds totaling $175,263 will be distributed to the 315 Colorado borrowers allegedly harmed by the conflict of interest. Of the refunds, the debt reduction service provider must refund $300 to all 315 clients impacted by the conflicts, totaling $94,500, and the lender must issue refunds to the 47 impacted borrowers, totaling $80,763.60. In addition to the refunds, the debt reduction service provider must revise existing client agreements, and both companies are barred from either lending or providing debt reduction services in the state.