The Consumer Protection Finance Bureau
(CPFB) nailed some debt relief lawyers for FRAUD
in tricking consumers into parting with
their money for “debt relief.”
Which turned out to relieve them only of their money
and enrich the debt relief lawyers in the firm.
What Is Debt Relief?
Debt relief lawyers, and other scammers, use scare tactics to keep folks away from filing bankruptcy.
You have heard the radio ads: “The secret the credit card companies don’t want you to know!” The “government program” blah, blah, blah. This is how the PYMNTS.com cite reported the debt relief lawyers story:
“The defendants exploited consumers who were already suffering financial difficulties by tricking them into paying steep, illegal fees,” said CFPB Director Richard Cordray in a press release. “We put a stop to this scam once already, and we intend to do it again.”
According to the CFPB, the Telemarketing Sales Rule generally prohibits debt relief providers from charging a fee until they have actually settled, reduced or changed the terms of at least one of the consumer’s debts and limits the types of fees a debt relief provider can charge for already settled debts. With this rule, consumers facing financial difficulties don’t have to pay any fees for debt relief until they receive the services they signed up for.
What Do Debt Relief Lawyers Promise?
The scam works like this. You are solicited as having debt issues, and they have a solution that keeps you out of bankruptcy.
The written contracts do not match the website and email promises, and what the debt relief lawyers tell you. Which is, that they can get 50%, 80% or more of your credit card debt forgiven! No more calls, letters, garnishments!
The problem is, the creditors do not even talk to the debt relief lawyers until there is money on hand.
So the scammers take your monthly payment, for months and years, until they get $10,000 or whatever they need to start talking to your creditors.
Who are meanwhile free to call, write, sue, garnish, and so on.
It is illegal for the debt relief lawyers to charge fees up front, and that is how this firm got nailed.
Before that rule, those monthly fees you paid for a year or more went mostly to the debt relief scammer and not to your creditors. And, no refunds.
Read the fine print.
the defendants violated that rule by collecting illegal fees and deceiving consumers about upfront fees they charged. The CFPB alleged that consumers who signed up sought services only for debt relief and not bankruptcy. The contract given to consumers related to bankruptcy was a ruse to disguise illegal upfront fees. As result of the scam, the CFPB said the attorneys collected tens of millions of dollars in unlawful fees and often didn’t settle any of the debts.