The U.S. District Court for the Central District of California entered a consent judgment resolving a dispute arising from a CFPB complaint issued in 2017 against a group of affiliated law firms and their managing attorneys for violations of the Telemarketing Sales Rule (TSR).
The CFPB alleged that defendants: (i) collected fees from consumer before providing debt relief services; (ii) collected fees that were disproportionate to the services provided; (iii) misrepresented that advance fees would not be charged; and (iv) provided substantial assistance or support to a company while knowing or consciously avoiding knowing that the company was engaged in acts or practices that violated the TSR.
While neither admitting nor denying the CFPB’s allegations or the factual findings outlined in the judgment, the defendants agreed to pay approximately $35.3 million in redress to affected consumers and a $40 million civil money penalty. However, based on the defendants’ inability to pay this amount, full payment was suspended subject to the defendants’ paying $50,000 to affected consumers and $1.00 toward the civil money penalty. Further, defendants are permanently banned from, among other things: (i) participating in telemarketing any consumer financial product or service; (ii) advertising, marketing, promoting, offering for sale, selling, or providing any debt relief product or service; and (iii) receiving any remuneration from, holding any ownership interest in, providing services to, or working in any capacity for any person engaged in advertising, marketing, promoting, offering for sale, selling, or providing any debt relief product or service.