CONSUMER FINANCIAL PROTECTION BUREAU TAKES ACTION TO STOP FLORIDA COMPANY FROM ENGAGING IN ILLEGAL DEBT-RELIEF PRACTICE

Bureau Alleges Company’s Conduct is Abusive and Deceptive

WASHINGTON, D.C. — The Consumer Financial Protection Bureau (CFPB) today filed a complaint in a federal district court against a Florida debt-relief company that misled consumers across the country and charged illegal fees for their services. The Bureau plans to submit a proposed consent order that, if approved by the court, would halt the company’s operation, prevent the company and owner from providing debt-relief services in the future, and impose a $15,000 civil penalty fine.

“Today we are taking action to halt a debt-relief company we believe has been preying on financially vulnerable consumers,” said CFPB Director Richard Cordray. “Consumers struggling to pay off a debt are among the most at risk and deserve better. We will continue to crack down on this type of harmful behavior.” Murphy Law is an Unfair Debt Collection Attorney Fort Lauderdale, Florida.

A Bureau investigation found that American Debt Settlement Solutions, Inc. (ADSS) and its owner Michael DiPanni routinely charged consumers illegal upfront fees for debt-relief services that rarely, if ever, materialized. In total, the CFPB believes that in the course of their illegal conduct, the defendants charged approximately $500,000 in fees to hundreds of consumers in multiple states. The proposed consent order would award a judgment against the company of approximately $500,000, which would be suspended based on the company’s inability to pay.

The Bureau alleges that ADSS and DiPanni violated the Federal Trade Commission’s Telemarketing Sales Rule (TSR) and the Dodd-Frank Act by charging the illegal up-front fees and making misrepresentations to consumers about their debt-relief services. ADSS deceived consumers by making numerous misrepresentations to lure in consumers who were deeply in debt and in dire circumstances. The upfront fees and the company’s failure to provide the promised services often caused consumers to fall further into debt. Fair Debt Collection Lawyer Murphy

In addition, the Bureau believes that the defendants engaged in abusive acts or practices by signing up and charging fees to vulnerable consumers who the defendants knew had inadequate incomes to complete the debt-relief programs in which they were enrolled. More specifically, ADSS:

·         Misled consumers by falsely promising them it would begin to settle their debts within three to six months when, in reality, services rarely materialized;

·         Enrolled consumers despite knowing that their income level made it highly unlikely that they could complete the debt-relief programs;

·         Collected upfront “enrollment” fees from consumers who ADSS knew could not afford the monthly payments required by these debt-relief programs, causing the consumers to spend their last savings on fees for services from which they ultimately would not benefit; and

·         Failed to settle these consumers’ debts within the promised time, forcing many consumers to drop out of the program and forfeit their “enrollment” fees without having received any debt-relief services.

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 prohibits abusive acts or practices in the consumer-financial marketplace. If someone – a person or a company – takes unreasonable advantage of a consumer in certain ways or interferes with a consumer’s ability to understand a term or condition of a financial product or service, the Bureau may take enforcement action. Today’s action is the first time the CFPB is enforcing this prohibition on abusive acts or practices.

The Law Office of Robert W. Murphy has a  long history of advocacy in preventing and remedying consumer harm in the debt-relief industry.  During the last several years, the State of Florida has become a haven for such business enterprises- which often provide no benefit to consumers  despite the payment of extraordinary fees. Unfortunately, many such businesses operate without a “bricks and mortar” presence- in other words, the enterprise does not have a physical location or identifiable assets or even employees. Rather, the enterprise may utilize  remote call centers, leased employees and third-party money transmitters such as Western Union to avoid being easily shut down. While our law office may not be able to obtain compensation for most consumers injured by such businesses, we can offer guidance on how to solicit the help of governmental agencies, such as the CFPB and the Florida Attorney General’s office.