The Consumer Financial Protection Bureau (CFPB) is tasked with investigating financial scams targeting American consumers and taking follow-up action as necessary. Increasingly, the bureau’s resources are being allocated to close scrutiny of debt settlement companies.
There is certainly good reason for that, as both anecdotal and hard evidence amply suggests. For myriad reasons, consumers are rarely helped by such companies in their attempts to rid themselves of troublesome debt and avoid foreclosure, bankruptcy and other matters.
In fact, the industry has long had an obvious and well-chronicled problem marked by many unreputable actors who seek to actively scam good-faith and vulnerable consumers trying only to regain financial footing and get a fresh start.
Florida is fertile ground for such tactics. Just last December, for example, a CFPB investigation into a debt-relief company — Payday Loan Debt Solution Inc. — uncovered illegal business practices that led to a joint enforcement action between the bureau and Florida authorities. Payday Loan was eventually required to pay many consumers refunds for scamming them.
And earlier this week the CFPB issued a news release indicating that, for the first time ever, criminal charges were being filed in a federal court against two debt settlement companies following a referral from the bureau.
One of those companies was a New York-based entity, with the other having its offices in New Jersey. Both companies are being accused of scamming consumers of more than $1.3 million by illegally demanding up-front fees in exchange for their promises to settle debt.
The result for consumers was a triple whammy of unanticipated and increased complication. Not only did they lose money to the companies, but they also fell even further into debt while injuring their credit scores and histories while they were in the very process of trying to improve them.
The message seems eminently clear to harassed, underwater or pressured consumers needing help to get out from under debt. Contacting a true professional, especially an experienced bankruptcy and debt-relief attorney, is a sound move toward making a fresh financial start.
Source: The Star-Ledger, “N.J. debt-relief service company accused of illegally charging customers advance fees,” Alexi Friedman, May 7, 2013