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Financial Services Law Insights and Observations

CFPB Sues Law Firms for Unlawful Debt Relief Scheme

Courts Consumer Finance CFPB Telemarketing Sales Rule


On January 30, the CFPB announced that it was seeking a permanent injunction against a group of affiliated law firms and their managing attorneys who charged illegal fees to consumers seeking debt relief. In a complaint filed with the Central District of California, the Bureau alleges, among other things, that the firms violated the Telemarketing Sales Rule by (i) collecting improper fees in advance of providing debt relief services; (ii) misrepresenting that advance fees would not be charged; and (iii) providing substantial  assistance to another company it knew or should have known was engaged in acts or practices that violated the rule, because the company had itself been the subject of a $40 million final judgment for similarly deceptive upfront fee arrangements in March 2016. The CFPB contends that the same attorneys from the earlier 2016 action—presently under appeal—took over operations of the firms now targeted.

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