Debt Relief Company Settles With NY AG; Will Repay $3.6M to Customers

For the second time in nine years, the Attorney General of New York has reached a settlement with a debt relief company that was accused of engaging in deceptive practices.

Freedom Debt Relief will return $3.6 million to customers of its services after they were misled about the amount of savings they could achieve by signing up for the company’s services. Under an enforcement order from 2011, the company was required to disclose the percentage of consumers who achieved the savings it was advertising in its promotional materials. For example, it advertised savings that were achieved by individuals who made all of their monthly deposits, but that represented only one-third of New York consumers. The average customer saved less than half of what the company advertised.

A copy of the proposed settlement can be accessed by clicking here.

The disclosure requirement was part of a 2011 settlement between the New York AG and Freedom Debt Relief. In that settlement, Freedom Debt Relief refunded $1.1 million back to customers and paid a fine of $100,000. This time, the company will refund $3.6 million back to consumers as well as agree to the following terms:

  • Expressly states the percentage of consumers who achieve the high end range of savings claims — where it is more than five percent above what the majority of consumers achieve — so that consumers know that those high savings numbers are not typical, and
  • Ensures that future savings claims are based on the consumer’s total debt with the Freedom Debt Relief program, not the usually significantly smaller amounts of debts actually settled by Freedom Debt Relief. 

“Today’s settlement will deliver more than $3.5 million directly into the pockets of struggling consumers, many of whom continue to suffer the devastating economic impacts of COVID-19,” said Letitia James, the Attorney General of New York, in a statement. “Ten years after this company paid over $1.2 million to my office for its fraudulent and deceptive practices, Freedom Debt Relief is back in hot water for unlawful behavior once again. Today’s settlement will ensure additional restrictions are placed on Freedom Debt Relief so that the company can no longer take advantage of consumers.”

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