A California-based, online debt settlement company would pay $646,000 in redress to consumers and a $750,000 civil money penalty related to allegations the firm violated the Consumer Financial Protection Act and the Telemarketing Sales Rule under a proposed settlement filed Tuesday with the Consumer Financial Protection Bureau (CFPB).
The bureau said that SettleIt, Inc., presents itself as an independent debt-settlement company that helps consumers negotiate with creditors like CashCall and LoanMe even though it is affiliated with both creditors: The same individual owns both SettleIt and CashCall, and LoanMe is tied to SettleIt through loans and agreements.
The CFPB alleges that SettleIt abused consumers’ trust by charging fees to negotiate settlements that favor those companies; that it steered distressed consumers into taking out expensive loans with CashCall and LoanMe while hiding the fact that SettleIt took its debt-settlement fees from these loan proceeds; and that it did not tell consumers about its relationships with CashCall and LoanMe, even including language in call scripts saying “we are not owned or operated by any of your creditors.”
In its complaint, the CFPB said that SettleIt regularly prioritized CashCall and LoanMe in settlements of consumers’ debts, failed to clearly and conspicuously disclose the costs of its services, and required consumers to pre-authorize settlements so that SettleIt could resolve consumers’ debts without their express consent.
In addition to paying redress and the penalty, SettleIt would be required under the settlement agreement to stop settling debts for creditors with which it shares an ownership interest. The complaint and proposed settlement were filed in the U.S. District Court for the Central District of California.
CFPB Takes Action Against SettleIt, Inc. for Steering Consumers into High-Cost Loans