On July 31, a magistrate judge for the U.S. District Court for the Western District of New York recommended denying a relief defendant’s motion to dismiss a complaint filed by the CFPB and several state attorneys general seeking to disgorge funds obtained by the relief defendant as a result of alleged violations of the Telemarketing Sales Rule. The case stemmed from a January 10, 2024, complaint, then amended, alleging that the defendants violated the Telemarketing Sales Rule, which implements the Telemarketing and Consumer Fraud and Abuse Prevention Act, as well as related state laws, by operating a scheme that collected illegal exorbitant advance fees for debt-relief services from financially distressed consumers since at least January 2016.
The court found the relief defendant, who filed the motion to dismiss, received funds through her family trust which were obtained from consumers as a result of the alleged violations, and that these funds are subject to disgorgement. The court rejected the individual’s arguments that she did not directly receive funds from a principal defendant, no longer possessed the funds, and that some claims were time-barred, finding the allegations sufficient to state a claim for relief at this stage. For these reasons, the magistrate judge recommended that the individual’s motion to dismiss be denied.
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