On May 17, the Consumer Financial Protection Bureau (CFPB) announced a settlement with DMB Financial LLC, a Massachusetts-based debt-settlement company.
In its complaint, the CFPB alleged that DMB Financial violated the Telemarketing Sales Rule (TSR) and the Consumer Financial Protection Act of 2010 (CFPA) by charging illegal fees and misleading consumers about its business practices. Specifically, the CFPB alleged that DMB Financial:
- Violated the TSR by requesting and receiving fees before it performed its promised debt-relief services and before consumers made any debt-settlement payments; by charging fees based on the increased debt amounts after enrollment rather than based on the amount of each debt at the time of enrollment; and by failing to properly disclose when, and under what conditions, it would make a bona fide settlement offer to each creditor or debt collector;
- Violated the CFPA by misleading consumers about when it would charge fees and how it would calculate its fees.
The CFPB’s settlement agreement prohibits DMB Financial from engaging in the illegal practices described above, and it also requires the company to pay $5,400,000 in consumer redress.
“DMB Financial preyed on consumers who were struggling financially, charging millions of dollars in illegal upfront fees and hiding the true cost of its services,” said CFPB Acting Director Dave Uejio. “Charging upfront fees for debt settlement is a violation of federal law, and the CFPB will continue to act decisively when we see companies taking advantage of consumers in this way.”