CFPB Cracks Down on Illegal “Debt Relief” Practices
By Consumers Union on Friday, May 31st, 2013
This week, the CFPB took action against a Florida company offering “debt relief” services – in other words, the promise to negotiate on your behalf to obtain a settlement at less then the original amount you borrowed.
The CFPB’s complaint alleges that the company, American Debt Settlement Solutions (ADSS), routinely charged consumers illegal upfront fees for debt relief services that rarely, if ever, materialized. In addition, the Bureau believes that the defendants engaged in abusive acts or practices by signing up and charging fees to vulnerable consumers who the defendants knew had inadequate incomes to complete the debt-relief programs in which they were enrolled.
We’ve been telling consumers for years to be wary of these debt relief services, also commonly known as “debt settlement.” For more information about debt settlement traps, and tips on how to get real relief, click here.
This action is big news, too, because it’s the first time that the CFPB has used its authority under Dodd-Frank to crack down on “abusive” practices with respect to financial services – an important new tool in making the market safer for consumers. This new authority may be under attack if the Senate fails to confirm a Director of the CFPB before Richard Cordray’s recess appointment expires. We are working hard to urge the Senate to vote and confirm Mr. Cordray to a full term. Click here if you want to add your voice to our campaign!
Have you ever tried to use debt relief services? Do you know someone else who has? If so, tell us in the comments.