On May 17, 2021, the Consumer Financial Protection Bureau (“CFPB”) announced that it entered into a proposed settlement of its lawsuit filed in a Massachusetts federal district court against debt settlement company DMB Financial, LLC (“DMB”), alleging that the company engaged in deceptive acts or practices in violation of the Telemarketing Sales Rule (“TSR”) and the Consumer Financial Protection Act (“CFPA”).   The proposed order would impose a judgment of $7,700,000 against DMB, which would be suspended upon its paying $5,400,000 in restitution to consumers.

In its December 2020 complaint, the CFPB alleged that DMB engaged in deceptive acts or practices in conjunction with its fees and disclosures, violating both the TSR and the CFPA.  To support this claim, the CFPB alleged:

  • DMB represented to consumers that they would not charge fees for services until settlement payment was made to a creditor, yet collected fees in cases where there was either no settlement or the consumer did not make a settlement payment.
  • DMB requested and received fees based on consumers’ debt amounts at a point in time after their program enrollment, instead of the debt amount at the time of enrollment.
  • DMB failed to disclose in a clear and conspicuous manner, prior to enrollment, of the time frame by which DMB would make a bona fide settlement offer to a consumer’s creditors.

In addition to paying monetary relief, DMB must refrain from the deceptive acts or practices alleged in the complaint regarding fees and disclosures, and may not use or obtain a consumer’s credit report unless for an authorized purpose under the Fair Credit Reporting Act.

This action comes shortly after a previous proposed order on April 13, 2021 with another debt settlement company, SettleIt, Inc., which also contained alleged TSR and CFPR violations.   See our blog post on that order here.