On January 10, 2024, the CFPB and seven state attorneys general filed suit against a New York-based financial consultant company, chief executives, and several related entities for allegedly running an illegal debt relief service scheme in violation of the Telemarketing Sales Rule and other state laws.
According to the complaint, filed in the Western District of New York, the company and its alleged “web of shell companies” targeted consumers and charged illegal advance fees for promised debt relief services. However, the company allegedly provided very little debt-relief services. Further, despite leading consumers to believe that lawyers would negotiate debt-relief, if any negotiations took place, the company allegedly conducted the activities. “The operators of this scheme established a network of shell companies and law firms to hide their illegal activities from law enforcement,” said CFPB Director Rohit Chopra. “The CFPB and state attorneys general are seeking to shut down this outfit’s illegal activity.”
The CFPB is seeking yet-to-be-determined civil money penalties and redress for consumers, as well as injunctive relief permanently enjoining the corporations from any debt-relief service activities. The District court granted a temporary restraining order on January 11.
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