WASHINGTON (Legal Newsline) - A nationwide debt-relief services company must refund up to $100,000 to consumers who were unlawfully charged advance fees for debt-settlement services.
At the request of the Consumer Financial Protection Bureau (CFPB), the federal district court in Miami entered the order Dec. 21.
This is the first of the bureau's joint-enforcement action. The Attorneys General of New Mexico, North Carolina, North Dakota and Wisconsin as well as the State of Hawaii Office of Consumer Protection joined the bureau's lawsuit.
According to bureau investigation evidence found the defendant, Payday Loan Debt Solutions, Inc. (PLDS) routinely charged consumers fees prior to settling the consumers' debt. In addition to violating various state laws, this is also a violation of the Federal Trade Commission's Telemarketing Sales Rule, the Dodd-Frank Wall Street Reform and Consumer Protection Act.
PLDS has cooperated with the CDPB and immediately ceased collecting unlawful fees once informed of the investigation.
The court has ordered PLDS to provide a full refund, $100,000 in total, to consumers who were charged advance fees and received no debt-settlement services. The order also requires PLDS to pay a $5,000 penalty to the CFPB Civil Penalty Fund and prohibits PLDS from engaging in any future unlawful conduct.
Court orders were made at the request of the CFPB and the five state law-enforcement agencies.
"Today's order will put money back in the pockets of consumers who were wrongfully charged for debt-relief services," CFPB Director Richard Cordray said. "We are pleased to be working with our state partners on this important effort to protect consumers."
This action is the result of the CFPB's efforts to prevent consumer harm in the debt-relief industry to ensure federal consumer laws are being followed at every stage of the process. The bureau is focusing on debt-relief service providers and also their partners, including those who facilitate their illegal acts and violate federal consumer financial laws.