The Consumer Financial Protection Bureau yesterday announced an enforcement action against a debt settlement company that has ties to the very creditors it was trying to help consumers get out of debt from, fining the company $750,000 and ordering it to repay $646,000 back to its customers.
The company, Settlet, Inc., was accused of violating the Consumer Financial Protection Act and the Telemarketing Sales Rule by not disclosing its relationship to the creditors and for steering consumers into high-cost loans offered by affiliate lenders.
“SettleIt’s strategy of steering consumers into sweetheart deals with its confederates was illegal,” said CFPB Director David Uejio, in a statement [EDITOR’S NOTE: Where did the “acting” go in front of his title?]. “The CFPB will not tolerate companies that purport to represent consumers, but instead abuse their trust in a self-dealing scheme. This case provides a clear example of what Congress intended to prohibit when it created the CFPB and gave it authority to prevent abusive practices.”
Settlet presented itself as an independent company, but its owner also owned CashCall, a creditor, and Settlet was also affiliated with LoanMe. The company had scripts that purportedly told consumers that it was not owned or operated by any of their creditors.
The CFPB accused Settlet of charging fees to consumers to negotiate settlements that favored the creditors and steering consumers into taking out loans with those creditors “while hiding the fact” that it took debt-settlement fees from those proceeds.