Court renders judgments against several defendants in CFPB debt relief action
On December 15, the U.S. District Court for the Central District of California Between final judgment against two defendants (defendants) and a default judgment against another defendant (defaulting defendant) in an action brought by the CFPB alleging that the defendants (and others not subject to these judgments) have billed thousands of customers approximately $ 11.8 million in upfront charges in violation of the Telemarketing Selling (TSR) rule. As previously covered by InfoBytes, in July, the CFPB filed a lawsuit against the defendants, another company, its two owners and four lawyers, alleging that the companies would market its debt relief services to clients over the phone, encouraging those with private loans to register with a lawyer to reduce or eliminate their student debt. The companies allegedly charged the fee before the customer made at least one payment on the amended debts, in violation of TSR’s prohibition on requesting or receiving advances for debt service or, for some defendants, l ‘TSR’s ban on providing substantial assistance to someone who charges the illegal fees. In August, the court approved final judgments made with one of the owners of the other company and three of the lawyers. In December, the court issued a default judgment against the other company and another owner (previous InfoBytes coverage was available here).
The final judgment permanently prohibits the defendants from engaging in any debt relief or telemarketing service of any consumer financial product or service. In addition, the court issued a suspended judgment of over $ 11 million in damages, which will be settled by a payment of $ 5,000 (due to inability to pay) and each defendant is required to pay a civil fine. $ 1 at the office. A liability of nearly $ 5 million was incurred by default judgment against the defaulting defendant and a civil pecuniary fine of $ 5 million.