On February 28, the CFPB filed a letter with the U.S. District Court for the Western District of New York in a case brought by the CFPB and seven state attorneys general alleging an illegal debt-relief scheme where the defendant solicited consumers with large debts and directed them to contact defendants (covered by InfoBytes here). The Bureau acknowledged — due to leadership changes — it had missed a deadline to state its intentions in the case. It further averred it agrees with and adopts the position of the seven state attorney general co-plaintiffs and will continue participating in the ongoing litigation, including attending an upcoming March 6 hearing on pending motions relating to, among other things, a request for preliminary injunction.
The January 10 complaint filed by the CFPB and state attorneys general alleged that since 2016, the defendants: (i) collected approximately $100 million in upfront fees from consumers before providing debt relief services; (ii) directed consumers to stop making payments to creditors and instead make payments into an escrow account; and (iii) caused consumers to incur additional interest charges and fees while their debts remained unpaid.
