The Consumer Financial Protection Bureau (“CFPB”) recently prevailed on a motion for preliminary injunction against a Florida law firm and several related companies as part of its “nationwide sweep of alleged foreclosure relief scams.” According to the CFPB’s complaint against Hoffman Law Group, Nationwide Management Solutions LLC, Legal Intake Solutions LLC, BM Marketing Group LLC and File Intake Solutions LLC, the “Enterprise” “generated millions of dollars in illegal upfront fees by convincing consumers to pay for the opportunity to be included as a plaintiff in so-called ‘mass-joinder’ lawsuits against their mortgage lenders,” which the defendants promised would “induce banks to give the consumers mortgage modifications or foreclosure relief.” However, the CFPB alleged, although the firm often directed consumers to avoid interacting with the lenders and servicers, no one ever contacted the lenders on the consumers’ behalf, causing consumers to find themselves in default and at even greater risk of losing their properties.
In a 41-page order, Judge James I. Cohn found “good cause” to believe that the corporate defendants had violated various state and federal laws and that Plaintiffs were “likely to prevail on the merits of this action.” Thus, Judge Cohn granted the injunction, ordering that the assets of the corporate defendants be frozen and prohibiting the defendants from committing future violations of the law. The defendants were further prohibited from continuing to collect the advance fees and from using any of the consumer information they had collected “in connection with any mortgage assistance relief product.” Judge Cohn also required the defendants to disable their websites and suspend their Internet domain names.
What does this mean for other law firms and related companies purporting to seek relief on behalf of struggling consumers? The CFPB takes its protective duties seriously and is looking to ferret out businesses that prey on desperate and vulnerable consumers. Entities that do not play by the rules – or that make up their own rules – may just find themselves out of the game.