On March 16, the Consumer Protection Division of the Maryland Attorney General’s Office announced a settlement with five California law firms and Mandip Purewal , the owner of the firms. The Attorney General alleged that the firms illegally collected advance fees from consumers, ostensibly to settle the consumers’ debts. In actuality, the firms typically did not settle the debts.
The Maryland Debt Settlement Services Act (MD Code, Fin. Inst., § 12-1001 through § 12-10017), passed in 2011, prohibits a debt settlement company from charging a consumer any fees for services until the company has renegotiated, settled, reduced, or altered in some way the consumer’s debt. In the press release announcing the settlement, Maryland Attorney General Brian E. Frosh stated, “Consumers should not pay up-front fees for debt-settlement or debt-management services, and shouldn’t end up worse off than when they started.”
The Debt Settlement Services Act also requires any person offering debt settlement services in Maryland to register with the Maryland Commissioner of Financial regulation. None of the firms involved with this settlement – National Consumer Law Group, P.C.; U.S. Legal Services Group, P.C.; Imperial Law Group, P.C.; Apex Legal Group, P.C.; and Regis Law Group, P.C. – were registered in Maryland.
Under the terms of the settlement with the A.G.’s office, Purewal and the five firms must stop offering debt settlement services in Maryland, must return all payments to consumers for debts that were not settled, and must pay a $200,000 penalty and an additional $50,000 to cover costs of the investigation.