The Attorney General of Massachusetts has announced a consent order with a debt settlement company that will pay $1 million to settle claims it took advantage of consumers by charging them “significant” fees for negotiating settlements with creditors and enrolling consumers in “unaffordable” programs that left consumers “in worse financial condition than before.”
A copy of the consent order between the AG and DMB Financial can be accessed by clicking here.
DMB has also been sued by the Consumer Financial Protection Bureau, reaching a settlement earlier this year that saw the company repay consumers $5.4 million along with a civil money penalty of $1.
In both the settlement agreement with the CFPB and with the Massachusetts AG, the company has agreed to reform its business practices. DMB is now prohibited from:
- Requesting and receiving inflated or premature fees, in violation of Federal Trade Commission regulations;
- Failing to refund a proportionate amount of any settlement fee collected by DMB if the consumer does not complete making payments on that settlement;
- Making deceptive or unsubstantiated claims about DMB’s ability to settle debts;
- Failing to make relevant disclosures on its website and in any materials to prospective enrollees in DMB’s program; and
- Advising, representing or negotiating on behalf of a consumer who is sued for nonpayment of a debt, and failing to provide consumers who are sued with a list of resources.
“DMB’s business practices were the epitome of unfair and deceptive – preying on low-income consumers desperate for debt relief, charging them illegal fees, and leaving them with more debt, damaged credit, and sued by debt collectors,” said Maura Healey, Massachusetts’ AG, in a statement. “This settlement is first-of-its-kind against a debt settlement company in Massachusetts and its terms will lay out a roadmap for addressing misconduct in this industry going forward. We are pleased to secure the funds needed to give money back to consumers who were harmed by DMB’s illegal operations.”
DMB was first sued by the Massachusetts AG back in 2018. The company was accused of charging consumers for negotiating settlements, telling consumers to stop paying their debts and instead make payments into a dedicated savings account, and engaging in the unauthorized practice of law by continuing to represent consumers after they were sued in related to an enrolled debt. Many consumers were not able to complete the program, a fact that DMB knew but continued to enroll individuals anyway.
