Archives for March 2016

Final Judgment Entered in CFPB Case Against Morgan Drexen; Attorneys Found in Contempt

March 20, 2016 By admin Leave a Comment

In 2013, the Consumer Financial Protection Bureau (CFPB) sued debt settlement company Morgan Drexen for collecting illegal “upfront fees” for debt settlement services and for running deceptive advertisements. Shortly before that, the company filed suit against the CFPB, challenging the agency’s investigative authority. The CFPB prevailed in its lawsuit: in April 2015, a federal court ruled against Morgan Drexen and found that the company misled the court and falsified evidence during the lawsuit. Morgan Drexen went out of business in late June 2015 after filing for bankruptcy.

This week, at the request of the CFPB, a federal district court entered a final judgment against debt relief company.

The court found that the company violated federal law, prohibited Morgan Drexen from collecting any further fees from its customers, and ordered it to pay $132,882,488 in restitution and a $40 million civil penalty. This decision follows a stipulated final judgment against Morgan Drexen’s president and chief executive officer, Walter Ledda, that the court approved in October. The court found that Ledda violated federal law, banned him from providing debt relief services, and required him to pay restitution and a civil money penalty.

Final Judgments Against Ledda and Morgan Drexen

The court’s March 16, 2016 final judgment against Morgan Drexen memorializes its June 2015 conclusion that the company violated federal law, and its ruling that the company may not collect any more advance fees for debt relief services, or any more fees at all from its customers. The final judgment also orders Morgan Drexen to:

Pay $132,882,488 in restitution: Morgan Drexen is required to pay this amount to borrowers who enrolled in the company’s program between Oct. 27, 2010, when the federal ban on upfront fees went into effect, and June 18, 2015, when Morgan Drexen stopped selling debt relief services.

Pay a $40 million civil penalty: Morgan Drexen must pay this amount to the CFPB’s civil penalty fund.

Because Morgan Drexen has declared bankruptcy, any payment of this judgment will occur through the bankruptcy process.

The court’s October 2015 final judgment against Walter Ledda contains similar findings and injunctive and monetary relief. In that judgment, the court found that Ledda and Morgan Drexen violated the Telemarketing Sales Rule and the Dodd-Frank Act by charging consumers illegal upfront fees for debtrelief services, and by making deceptive statements about the company’s services. Under the terms of the final judgment, Ledda will:

Pay $500,000 to the CFPB for consumer redress: The final judgment requires Ledda to pay $500,000 to the CFPB for use in providing redress to consumers.

Surrender additional assets: The final judgment requires Ledda to turn over additional assets to the Morgan Drexen bankruptcy estate.

Pay a civil money penalty: Ledda is required to pay $1 to the CFPB’s Civil Penalty Fund. The Bureau did not require Ledda to pay a larger penalty because of his limited financial resources after repaying harmed consumers.

Exit the debt relief industry: The court has permanently banned Ledda from providing debt relief services or otherwise working in the debt relief industry.

The court also imposed a $99 million equitable money judgment and $20 million civil money penalty against Ledda, both of which are in large part suspended based on Ledda’s inability to pay. If Ledda fails to make any of the required payments or turn over his assets, or if the CFPB discovers Ledda misrepresented his financial condition, the full $99 million judgment and $20 million penalty will become due immediately.

Attorneys Found In Contempt

After the court’s June 2015 order prohibiting Morgan Drexen from charging fees for debt relief services, two attorneys, Vincent Howard and Lawrence Williamson, took the reins of Morgan Drexen and continued the company’s unlawful conduct. Among other things, Howard and Williamson:

Hired more than 50 former Morgan Drexen employees, including the company’s former owner and chief technology officer, and former chief financial officer;

Continued to charge fees to harmed consumers pursuant to the same contracts under which Morgan Drexen charged the consumers unlawful fees; and

Provided consumers misleading information about Morgan Drexen’s shut-down and contradicted the advice in court-approved letters about how consumers could protect themselves in light of Morgan Drexen’s unlawful conduct.

When the CFPB learned of Howard and Williamson’s actions, it filed a motion requesting that the court hold the attorneys and their law firms in contempt of the court’s order. In October 2015, the court found that the attorneys’ conduct had violated the court’s order, and held the attorneys and their law firms in contempt. The court ordered the attorneys to return all payments they had received from former Morgan Drexen consumers since the court’s June 2015 decision to ban Morgan Drexen from receiving such fees. The court also ruled that the attorneys will be fined $10,000 a day for each day they continue to accept fees from former Morgan Drexen consumers. The attorneys have appealed this order.

A copy of the court’s final judgment against Morgan Drexen and Walter Ledda can be found here.

A copy of the civil minutes regarding the judgment can be found here.

A copy of the court’s contempt order concerning the attorneys can be found here.

Final Judgment Entered in CFPB Case Against Morgan Drexen; Attorneys Found in Contempt
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Accounts Receivable Management

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Bank of America Debt Securitization Case is Actually Round Two

March 20, 2016 By admin Leave a Comment

Yesterday insideARM reported on a putative class action lawsuit filed against Bank of America alleging that the bank’s practice of filing lawsuits on their accounts violated the FDCPA since the accounts were previously “securitized.”

After that article was published we heard from two longtime insideARM contributors, Don Maurice from the Maurice Wutscher LLP law firm and Joann Needleman from the ClarkHill PLC law firm. Both wanted insideARM to be aware of a previous case involving the same Plaintiff’s attorney and similar (though not exactly the same) facts, but basically the same allegations and same legal theory. Maurice & Needleman PC was counsel for one of the defendants in the prior case.

The prior case, (Scott v. Bank of America, United States Court of Appeals for the Third Circuit, Case No. 13-4689) was a Court of Appeals decision from November 3, 2014. In that case the facts were only slightly different. Bank of America had securitized the account. After the account went into default the account in question was sold to a debt buyer and the debt buyer had initiated a collection lawsuit on the account. Plaintiff then sued the bank and the debt buyer. Plaintiff’s underlying theory was that Bank of America had nothing to transfer to debt buyer once it securitized the receivables.

In the District Court proceeding Bank of America and the debt buyer had moved to dismiss Scott’s Amended Complaint, arguing that the critical premise on which Scott’s claims rely—that once a credit card company securitizes the receivables of a credit card account, it no longer retains an ownership interest in the account—was incorrect. The District Court granted the motion to dismiss with prejudice.

Scott appealed that dismissal. In a “non-precedential opinion” the Court of Appeals affirmed the dismissal in all respects.

Editor’s Note: Generally, non-precedential opinions may not be cited in briefs submitted to the Court.

The decision can be found here.

insideARM Perspective

As noted in yesterday’s article, it will be interesting to track this case. The non-precedential nature of the earlier opinion only means that defendants in the current case cannot cite the Scott opinion in any briefs they might submit to the court in this action. The defendants can, however, cite all of the cases they previously cited in their earlier briefs in the Scott case. The defendant’s arguments succeeded once. One wonders whether plaintiff’s counsel will make new and/or different arguments in an effort to obtain a different result.

insideARM asked Maurice for his perspective on this latest case. He responded, “The problem with the plaintiff’s theory, at least in Scott, was that it ignored the terms of the securitization documents. First, only the receivable rights to an account are securitized, not the entire rights to the account. Thus, the creditor remains the owner of the account, but not the receivable rights. Second, once an account becomes in default, the receivables are ejected from the securitization and revert back to the creditor. So when the creditor goes to collect (or sell) a defaulted account, it has all rights, title and interest to the account.”

Bank of America Debt Securitization Case is Actually Round Two
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Accounts Receivable Management

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Payday Lending, Exemption for Community Banks, Arbitration and Ally Were the Hot Topics During CFPB Director Cordray’s Testimony Before Congress

March 20, 2016 By admin Leave a Comment

Payday Lending, Exemption for Community Banks, Arbitration and Ally Were the Hot Topics During CFPB Director Cordray’s Testimony Before Congress
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Accounts Receivable Management

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Executive Change: Commercial Debt Recovery Firm Johnson Morgan & White Names New Senior VP of Sales

March 20, 2016 By admin Leave a Comment

BOCA RATON, Fla. – Johnson, Morgan & White (JM&W), a privately-held commercial debt recovery firm, has named Cliff Sanders to Senior Vice President of Sales. Sanders brings more than two decades’ experience in business development and sales leadership in the credit and collections category. He most recently was Executive Vice President with Altus Global Trade Solutions.

Cliff Sanders

“It’s a real coup to land someone of Cliff’s stature. He’s a time-tested and seasoned sales executive well known and highly regarded throughout the credit and collections industry,” said Robert G. Cooper, President and CEO of Johnson, Morgan & White. “As our company continues to grow, Cliff is just the professional to help lead our customer-centric charge into new markets.”

Over the course of his career, Sanders has improved processes that have motivated sales teams, stimulated sustained growth, revenue, and profitability, all while mitigating risk.

“I’m at home at a boutique agency like Johnson Morgan & White, where experience and client relationships share equal importance,” he says. “Together, we will take a fragmented industry ripe for a true leader and create a one-stop shop for clients who otherwise get lost at a big firm.”

At Coface Collections / Altus GTS, Sanders helped develop, launch, and market various products, and was Team Lead on the company’s 2014 rebranding. In the preceding decade, he rose from Sales Training Manager to Client Sales Manager to National Sales Manager, assisting Altus GTS in achieving double-digit revenue growth and landing some of the largest companies in the world. He began in the industry as Director of Sales with Milliken and Michaels, where he was Top-5 in sales four of his five years there.

About Johnson, Morgan & White

Johnson, Morgan & White (www.jmandw.com) has extensive expertise in corporate debt recovery. The firm is one of world’s leading businesses and forensic collection companies and has collected, on behalf of its U.S.- and internationally-based clients, from businesses throughout the United States, Eastern and Western Europe, Asia, and the Middle East and Gulf States. JMW is a certified and bonded business-to-business collection company with the goal of recovering debts while protecting clients’ customer relationships. Various investigation techniques are employed to legally investigate and track corporate debtor’s money activity, including digital and public document investigations.

Executive Change: Commercial Debt Recovery Firm Johnson Morgan & White Names New Senior VP of Sales

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Executive Change: Lyle Roda Joins DCA as VP Business Development

March 20, 2016 By admin Leave a Comment

TORONTO, Ontario – Debt Control Agency (DCA), a leading national provider of collections and receivables management services announces a key addition to the executive team.

Mohsen Monavari, President & CEO said, “We are pleased to announce that Lyle Roda has joined the DCA team as Vice President of Business Development.”

Mr. Roda brings more than 20 years of industry experience in sales and operations to his new role and will provide great depth to DCA’s leadership. He will be in charge of managing and expanding DCA’s sales and client support teams. DCA continues to be very successful as a boutique agency highly focused on client retention through market leading service and results. The company is poised to expand its service offerings to open new opportunities as a part of the its growth plan and strategy. Mr. Roda will spearhead this effort.

“I look forward to working with Lyle to build on DCA’s strengths as we expand our services in the market and continue to earn our reputation as the supplier of choice to our clients,” added Monavari.

About DCA

Debt Control Agency (DCA) is a leading national provider of collections and receivables management services. With contact centres in Ontario and Quebec, DCA is headquartered in Toronto. We are nationally licensed and provide consumer and commercial debt recovery services to our clients in various industries.

DCA is results driven and focused on servicing our clients with the highest collection recovery rate while maintaining the best standards of customer responsiveness in the industry. Keeping this in mind, we continually invest in the company and our greatest asset, our people. DCA staff is thoroughly trained during on-boarding as well as continuously subjected to standardized testing and monitoring. Our senior management team has held key positions within the collections industry and have over 100 years combined experienced.

For more information about DCA visit: www.debtcontrolagency.com

Executive Change: Lyle Roda Joins DCA as VP Business Development
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Bank of America Hit With Class Action Over Debt Collection Litigation on Securitized Accounts

March 20, 2016 By admin Leave a Comment

A putative class action suit was filed yesterday against Bank of America (B of A) alleging that that the bank has been improperly suing consumers who owe on credit card debt after the bank had previously “sold” that debt via a securitization of a pool of accounts and thereby relinquishing its ownership interest in the account. The case, Willard v. Bank of America, et. al (Case No. 2:16-cv-01199) was filed in the United States District Court in the Eastern District of Pennsylvania. A copy of the Complaint can be found here.

The Allegations

The case was brought under the Fair Debt Collection Practices Act, 15 U.S.C. §§1692-1692p (FDCPA); and the statutes of the Commonwealth of Pennsylvania (the Pennsylvania Fair Credit Extension Uniformity Act (FCEUA), 73 P.S. §§2270.1-227. The complaint requests actual damages, punitive damages, treble damages, statutory damages, declaratory and injunctive relief, costs of suit, attorney’s fees, and other appropriate relief from defendants.

The summary allegations are that B of A has “engaged in a scheme whereby they issue credit cards to consumers and, then seek to collect the amounts allegedly due from each card holder’s use of the credit card, despite the fact that B of A has sold, transferred, assigned or otherwise conveyed its beneficial interest in each consumer’s credit card account to a trust as part of a financial transaction known as a credit card securitization. Having relinquished its beneficial interest, B of A no longer has a debt obligation owed to it by Plaintiff or the Class.”

The complaint alleges very specific elements of the B of A “sale” process from account creation through securitization; a process that shows an account moving via “sale” from Bank of America to Bank of America Consumer Credit Services to Bank of America Funding LLC to Wilmington Trust Company.

The complaint then alleges, “Wilmington Trust Company then underwrites a bond offering. The bonds are placed into tranches from senior debt to junior debt and each tranche has a certain amount of assets. Bank of America Consumer Credit Services still services the account by sending out bills and accepts payment, but Bank of America has given up ownership rights as required to Wilmington Trust Company, therefore Bank of America and its entities have given up its rights to sue its cardholders when they default on their debt.”

Finally, the complaint alleges, “Despite the fact that Bank of America intentionally relinquished its beneficial interest in Bank of America accounts, it has continued to pursue, along with its affiliates and the defendant law firms, collection lawsuits against Plaintiffs and members of the Class to recover the obligations allegedly owed on the Bank of America accounts.”

Plaintiff’s attorneys are seeking class certification.

insideARM Perspective

This case demands continued scrutiny by all banks and the ARM industry. The securitization of pools of accounts is a wide-spread process. The case has the potential to dramatically impact future collection practices regarding securitized accounts. While this particular case involves litigation on accounts that were securitized, any “sale” of those accounts could be subject to the same argument.

In fact, earlier this year, on January 26^th, insideARM published an article about another class action case that involved similar allegations involving securitized accounts. However, in that case, (Cox, et al v. Sherman Capital LLC, et al. U.S. District Court, Southern District of Indiana, 1:12-cv-01654-TWP-MJD) a federal judge in Indianapolis ruled that a lawsuit alleging violations of the Fair Debt Collection Practices Act (FDCPA) and the United States Racketeer Influence and Corrupt Organization Act (“RICO”) against Sherman Financial Group, one of the country’s largest debt buyers, could not proceed as a class action because circumstances vary too much among the class members.

Because of the high stakes involved, the Sherman case was vigorously pursued by Plaintiff’s attorney and subject to often contentious interplay among the attorneys involved. It is likely that this new case will have similar activity.

Bank of America Hit With Class Action Over Debt Collection Litigation on Securitized Accounts
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Accounts Receivable Management

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Executive Change: Stellar Recovery, Inc. Announces New Director of Client Services

March 20, 2016 By admin Leave a Comment

JACKSONVILLE, Fla. — Stellar Recovery, Inc. is pleased to announce that Kim Harvey has joined the Stellar team as Director of Client Services. Kim has over 26 years working in the legal collections industry in Georgia and Florida. She has a strong Client Services background as well as extensive management experience.

Before joining Stellar Recovery Kim was with Debski & Associates, P.A., a Jacksonville, Florida legal collections law firm where she was the Director of Operations. Kim was responsible for the oversight of over 30 staff members including the legal administration team, collections team, and accounting staff. Kim was also instrumental in on-boarding the firm’s second largest client, a national bank.

Prior to Debski & Associates, P.A., Kim was with Trauner, Cohen & Thomas, LLP in Atlanta, Georgia where she was the Legal Manager and responsible for the firm’s Georgia legal division. She was responsible for bringing several large bankcard clients to the firm.

Kim’s accomplishments include:

SE Regional Performance Award for a national bank
Operational Excellence Award from the National Attorney Network
Speaker, Operations Management Conference Track for National Association of Retail Collection Attorneys (NARCA)

As Director of Client Services, Kim will be overseeing the Client Services team as well as leading the Stellar Recovery Administrative team.

Kim’s initiatives for Stellar Recovery include:

Provide superior support to our clients and their initiatives
Developing consistent communication between Client Services and all Executive Teams regarding new clients, existing client requirements, and updates to client processes
Finding efficiencies in Client Services and Administrative Processes
Identifying opportunities for automation to streamline processes

Keith Jones, CMO, commented “we are excited to have Kim on board; her experience and the initiatives she is putting in place will make sure we provide our clients with Best in Class Service and Support.”

Stellar Recovery, Inc. Corporate Headquarters is located in Jacksonville, Florida, with a satellite office in Kalispell, Montana. Please visit our website at www.stellarrecoveryinc.com.

Executive Change: Stellar Recovery, Inc. Announces New Director of Client Services
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Accounts Receivable Management

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FTC Expands List of Banned Debt Collectors; Is There Any Connection to Legitimate Firms?

March 20, 2016 By admin Leave a Comment

Stephanie Eidelman

Today the Federal Trade Commission (FTC) announced it had added several new entries to its list of banned debt collectors; a list the FTC informally calls “The Debt Collection Hall of Shame.” The FTC first issued the list in February 2015, containing individuals and companies whose behavior was so egregious that courts have banned them permanently from participating in the debt collection business. At that time, the FTC’s Hall of Shame contained 63 inductees; there are now more than 100.

Those newly added to the list came out of the efforts of Operation Collection Protection — the first coordinated federal-state enforcement initiative targeting deceptive and abusive debt collection practices. They include: Broadway Global Master Inc., K.I.P., LLC (Payday Loan Recovery Group), National Check Registry, LLC and Premier Debt Acquisitions, LLC.

I suspect I can speak for all legitimate debt collectors – as well as other stakeholders in the industry – when I say that I applaud these efforts to put scammers out of business. The FTC calls them “debt collectors,” but they are really in another category from those whose business models are not centered around deceit. They taint everyone’s image.

Many in the industry are craving clarity (and a fix for some truly grey areas in the debt collection laws such as the ability to leave voicemail messages that are not incredibly awkward for both consumers and collectors). And a great deal of time is being spent by many – on all sides of the equation – to sort this out.

I really wonder, though, whether the extraordinary effort being placed on new rules, regulations, and supervision of those who do seek to follow the law will have any effect at all on the proliferation of companies like those on the “Hall of Shame.” I don’t know that any of those entities/individuals ever attended industry conferences, participated in association activities, or anything else that would demonstrate that they attempt to operate “above board.” I doubt they would ever follow the laws, no matter what they are.

Best of all worlds: Fix the gray areas and spend even more effort shutting down the crooks, rather than on supervising those who make great effort to follow the law, and whose examinations largely turn up technical mistakes.

FTC Expands List of Banned Debt Collectors; Is There Any Connection to Legitimate Firms?
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Accounts Receivable Management

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Another Anti-CFPB Television Ad Hits the Airwaves

March 20, 2016 By admin Leave a Comment

Tim Bauer

Last night I received a text message from an industry colleague asking me if I was watching CNN. He told me about a commercial that had just run that was highly critical of the Consumer Financial Protection Bureau (CFPB). Unfortunately, I was watching ESPN instead of “real news.” (What does that say about me and what does that say about my industry colleague?)

I started doing some searching for the commercial on the Internet. However, before I could find it I received a second text from my friend with a link to the website of the organization that produced the commercial, called Protect America’s Consumers. (Again, what does that say about me and what does that say about my industry colleague?) Click on the image below to view the commercial.

I started doing some research on the group and the commercial. I came across this article from January 7, 2016 on POLITICO.

It seems that no one knows who is behind Protect America’s Consumers. The only person who has been identified with the group is spokesman Steve Gates. The POLITICO article states that Gates did not respond to requests for comment. The article also notes, “The address on its Virginia incorporation record matches the law firm Holtzman Vogel Josefiak Torchinsky, which specializes in untraceable pressure groups for conservative causes and whose clients include Karl Rove’s American Crossroads, Sen. Marco Rubio’s presidential campaign and the National Republican Congressional Committee.”

Last night’s commercial focused on a single theme and then uses a number of specific issues to reinforce it. The main theme is the lack of accountability at the CFPB. To support that position the commercial first discusses the cost of the new CFPB building, stating that the Bellagio Hotel was cheaper to build, then moves to complaints about the Bureau’s treatment of female and minority employees, before finally discussing how the CFPB executives set their own salaries and the fact that those salaries “average” $10,000 per month. The commercial then closes with, “The CFPB is plagued with scandal and corruption and needs to be reformed.”

In November of last year insideARM published an article about a different anti-CFPB television commercial produced by The American Action Network (AAN). That commercial was slickly produced compared to the rather plain, under-produced Protect America’s Consumer commercial.

It will be interesting to see if these commercials have any impact, particularly during this election year.

Another Anti-CFPB Television Ad Hits the Airwaves
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Accounts Receivable Management

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CFPB Announces Proposed Order to Shut Down Student Debt Relief Scam

March 20, 2016 By admin Leave a Comment

Yesterday the CFPB announced it had requested that a federal district court enter a final judgment and order that would shut down a student debt relief scheme that charged borrowers millions of dollars in illegal upfront fees for federal student loan services. If approved by the court, the proposed judgment would ban the company, Student Loan Processing.US, and its sole owner, James Krause, from any future involvement in debt relief and student loan services. The order would also require the company to pay refunds to thousands of harmed consumers and a civil money penalty.

Student Loan Processing.US is headquartered in Laguna Nigel, Calif., with an office in Dallas, Texas. The company also operates under the name IrvineWebWorks, Inc. and runs websites at StudentLoanProcessing.us, StudentLoanProcessing.org, and slpus.org. The student debt relief company has been in operation since at least May 2011 and its customers are located throughout the United States. James Krause is the company’s founder, president, and sole owner.

In December 2014, the CFPB filed a lawsuit against Student Loan Processing.US and Krause in federal district court in California alleging that the defendants charged consumers illegal upfront enrollment fees before providing any services, deceived customers about the costs of their services, and falsely represented an affiliation with the Department of Education.

According to the CFPB lawsuit, Student Loan Processing.US illegally marketed and sold services promising to advise and assist borrowers applying for Department of Education student loan repayment programs. The company charged consumers an initial enrollment fee for its services of 1 percent of the borrower’s federal student loan balance plus a monthly maintenance fee of at least $39 per month for the entire repayment term of the borrower’s federal student loan.

During initial enrollment calls with customers, the company’s representatives failed to disclose the recurring monthly fee before collecting payment information from the customer. The complaint alleges that the defendants also misrepresented the amount and duration of that fee. (The Department of Education offers numerous plans to borrowers, and charges no fees for enrollment.)

The Enforcement Action

If the proposed consent judgment is entered by the court, Student Loan Processing.US and Krause must:

Shut down illegal operations: Student Loan Processing.US must shut down all operations within 45 days of the entry of the court’s judgment.

Cancel all contracts with consumers and stop charging them: The company must immediately stop charging customers any fees for its services. All contracts between Student Loan Processing.US and its customers would also be cancelled.

Pay consumer refunds: The order imposes a judgment for relief and damages to consumers of over $8.2 million. A significant portion of that payment, however, is suspended based on the defendants’ inability to pay. Under the terms of the order, a payment of approximately $326,000 would be sent to the Bureau and would be distributed to compensate victims of the defendants’ illegal activities.

Stop participating in the debt relief and student loan industries: James Krause and Student Loan Processing.US would be permanently barred from marketing or providing debt relief and student loan services. Krause and the company would also be permanently barred from assisting anyone else who markets or provides such services.

Ensure student loan borrowers do not miss important repayment benefits: The Department of Education requires that student loan borrowers recertify their income-driven repayment plans every year. For consumers who have recertification or renewal deadlines for these programs that are within 30 days of the entry of the judgment, the company must prepare, process, and mail to the Department of Education all paperwork necessary for recertification or renewal. The company must also mail a notice informing customers that it is shutting down and reminding them of the steps that must be taken to remain enrolled in the Department of Education’s student loan repayment programs.

Pay a civil penalty: The order also imposes a penalty of at least $1 to be paid into the CFPB’s Civil Penalty Fund. By requiring the defendants to pay a penalty of at least $1, victims of the defendants’ illegal practices may be eligible for additional relief from the CFPB Civil Penalty Fund in the future, although that determination has not yet been made. The Bureau is seeking this nominal penalty because of the defendants’ limited financial resources.

The proposed final judgment and order follows a Feb. 5, 2016 court ruling in favor of the CFPB on its claim that the defendants violated the Telemarketing Sales Rule by charging customers an advance fee before providing the debt relief service they advertised. That ruling also found in favor of the CFPB on its claims that the defendants violated the Telemarketing Sales Rule and the Dodd Frank Act’s prohibition against deceptive acts or practices by collecting payment information from customers before disclosing the total cost of the company’s services.

This ruling creates an important precedent in the student debt relief market. It establishes that companies offering to enroll students in Department of Education repayment programs may be running afoul of federal consumer financial laws if such companies collect upfront fees, or do not clearly disclose all fees for their services before the consumer supplies any payment account information.

Click here to read the CFPB’s complaint against Student Loan Processing.US

Click here to read the proposed final judgment and order

Click here to read the court ruling

CFPB Announces Proposed Order to Shut Down Student Debt Relief Scam
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