The Consumer Financial Protection Bureau yesterday filed a lawsuit against a debt settlement company, alleging it engaged in abusive and deceptive acts and practices by charging fees before it performed any services and collecting higher fees than it was supposed to.
A copy of the complaint against DMB Financial, LLC, filed in the District Court for the District of Massachusetts, can be accessed by clicking here.
In filing the complaint, the CFPB is accusing the defendant of violating the Telemarketing Sales Rule and the Consumer Financial Protection Act. The CFPB is seeking an injunction, redress to consumers, disgorgement of ill-gotten gains, and a civil money penalty.
When it settled debts on behalf of its customers, the defendant allegedly based the fees that it charged on the amount of the debt when it was settled and not the amount at the time of enrollment. The discrepancy led to the defendant charging its customers more because interest and fees often continued to accrue on the unpaid balance until the debt was settled, according to the complaint.
The complaint did not indicate how much money the defendant collected through its settlement program or how much it charged in upfront fees, but it did say that it received upfront fees from “thousands” of consumers. The complaint listed seven counts of violating the TSR and the CFPA, including failing to disclose the amount of money for each outstanding debt to be saved, failing to disclose the amount of money for each outstanding debt to be saved, deceptive representations about fee structure, charging fees based on debt amount after enrollment, deceptive representations regarding chargeable events, charging fees in absence of a settlement, and charging advance fees.
