Regulatory, conformity, and litigation developments within the economic solutions industry

Regulatory, conformity, and litigation developments into the monetary solutions industry

Home > CFPB > CFPB Settles with Freedom credit card debt relief

On July 9, 2019, the usa District Court for the Northern District of Ca joined a stipulated judgment that is final purchase in the event quantity 17-cv-06484, customer Financial Protection Bureau v. Freedom credit card debt relief, LLC, et al. Underneath the stipulated judgment, Freedom debt settlement, LLC (Freedom credit card debt relief is not pertaining to Freedom Mortgage Company) is enjoined from participating in deceptive conduct and billing costs for non-settlement resolutions with customers regarding debts that the organization consented to negotiate. Freedom Debt Relief can be expected to provide particular disclosures regarding negotiations with creditors and customers’ entitlement to settlement funds upon withdrawing through the debt-relief system. The business is needed to spend $20 million to your customer Financial Protection Bureau (CFPB) for restitution and submit a thorough redress and compliance want to the CFPB determining affected customers and otherwise complying with all the judgment that is stipulated. Finally, Freedom credit card debt relief is needed to pay a $5 million civil money penalty, of which $439,500 will be compensated to your FDIC in accordance with a consent order that is different.

The company’s co-founder and co-CEO on November 8, 2017, the CFPB filed an action against Freedom Debt Relief and Andrew Housser. The CFPB filed its first complaint that is amended June 1, 2018. In accordance with the grievance, Freedom Debt Relief supplied unsecured debt relief through a debt settlement scheme by which customers deposited funds into A fdic-insured bank, while the business negotiated with consumers’ creditors to stay their debts. The CFPB alleged that Freedom debt settlement did not offer consumers with realize that, if customers withdrew through the debt relief programs, they might get their deposits straight back, less any fees incurred. Notably, Freedom Debt Relief purportedly misrepresented those charges charged to consumers. Furthermore, even though the business presumably knew particular creditors would maybe not negotiate consumers’ debts, it however represented to people that all creditors would negotiate. Further, Freedom credit card debt relief purportedly encouraged customers to misrepresent its participation within their reports whenever customers negotiated straight with creditors.

In the 1st amended grievance, the CFPB pled five counts for relief for so-called violations regarding the customer Financial Protection Act of 2010 (CFPA) while the Telemarketing product sales Rule (TSR). Especially, the CFPB alleged counts sounding in violations regarding the CFPA for (i) deceiving customers regarding creditors’ willingness to negotiate with freedom; (ii) deceiving customers regarding fees; (iii) abusively needing customers to negotiate on their; also as violations of this CFPA and TSR for (iv) failure to obviously and conspicuously disclose consumers’ legal rights to funds; and (v) asking costs into the absence of a settlement. Without admitting or doubting the CFPB’s allegations, apart from those facts required to establish the court’s jurisdiction, Freedom debt settlement and Andrew Housser consented to a stipulated judgment that is final July 9, 2019.


Settlements with all the CFPB have historically tended to add injunctions against defendants’ continued activity that is wrongful monitoring or reporting to make certain conformity. While Freedom Debt Relief’s stipulated judgment offers comparable relief, in addition it includes a hefty $20 million fine for restitution, along with a $5 million civil penalty. Anticipating, we could likely expect future settlements under Director Kathy Kraninger to add provisions that are similar.

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