Consumer Financial Protection Bureau sues Freedom Debt Relief

The U.S. Consumer Financial Project Bureau (CFPB) announced in early November, 2017 that it has filed a lawsuit against Freedom Debt Relief, which is the largest debt settlement services provider in America. In the lawsuit, the CFPB alleges that the Freedom Debt Relief Company, who claims they can resolve debts for less than you owe and in a faster time than making minimum payments, mislead customers about its fees and that the debt relief company also charges consumers without settling their debts as promised. The lawsuit further contends that Freedom Debt Relief, often times, makes its customers negotiate their own settlements and fails to inform them of their rights to funds that they deposited with the company.

Freed Debt Relief Denies Wrongdoing

In response to the allegations in the CFPB lawsuit, Freedom Debt Relief claims that they plan to “vigorously contest” the lawsuit claiming that the federal regulator doesn’t understand its business practices. The company made a statement this week that Freedom Debt Relief’s business practices are both legal and ethical and offer an important service to its clients. The co-Chief Executive of Freedom Debt Relief says that the company will contest the U.S. consumer agency’s lawsuit.

Debt Settlement Lawsuit

The CFPB lawsuit that claims the San Mateo, California based company and its co-Chief Executive acted unlawfully and is seeking civil penalties, as well as, compensation for affected consumers. Among additional accusations in the lawsuite, the consumer protection agenct claims that Freedom Debt Relief charges a fee to consumers when creditors stop collection efforts even if Freedom Debt Relief didn’t do anything. Also, the CFPB says that Freedom deceived consumers about their clout with creditors by claiming they would negotiate with creditors that the company knew didn’t negotiate with debt-settlement companies.   While it is unclear how the lawsuit will play out in court, one take away from the matter is that the Consumer Financial Protection Bureau is serious about cracking down, and even banning, debt settlement companies that don’t help consumers actually get out of debt.