On October 12, 2017, the Consumer Financial Protection Bureau (CFPB) announced that it filed suit against two debt-relief companies and their owners, and a third company that processed payments for and provided other services in connection the debt-relief providers. The complaint alleges violations under the Consumer Financial Protection Act of 2010 (CFPA), 12 U.S.C. §§ 5531(a), 5536(a), 5564 & 5565, and the Telemarketing Sales Rule (TSR), 16 C.F.R. pt. 310

The CFPB alleges that the companies misrepresented their services by suggesting they were affiliated with the federal government and unlawfully charged upfront fees for its services. Specifically, the CFPB claims that the debt-relief providers deceived customers about their affiliation with the federal government by sending marketing material to customers that resembled official government notices. The materials contained an “official-looking seal,” called the letter a “regulatory notice,” and included a case number and “entitlement amount.” The defendants also allegedly violated federal law by charging advance fees prior to providing debt-relief services and without achieving the promised results. The complaint further asserts that the companies failed to make certain required disclosures about not paying debts and about the results that could be achieved.

The CFPB is seeking a permanent injunction to prevent future violations, restitution for the amounts illegally charged to consumers, disgorgement of ill-gotten revenues, costs and civil penalties.