CFPB seeks $5.4 million in consumer redress, $1 fine from MA debt settlement firm

Proposed $7.7 million settlement would be suspended upon payment of redress

A debt collection firm in Massachusetts would be required to pay $5.4 million in consumer redress and a $1 civil money penalty under a settlement proposed Monday by the Consumer Financial Protection Bureau (CFPB).

The firm, DMB Financial, LLC, is a Massachusetts-based debt-settlement company that operates in at least 24 states. The CFPB sued the firm Dec. 1, alleging that DMB Financial charged illegal upfront fees and violated federal disclosure requirements. These actions were in violation of the Telemarketing Sales Rule (TSR) and the Consumer Financial Protection Act (CFPA), the bureau said.

SpecifIcally, the CFPB said it alleged that:

  • DMB Financial charged fees before some consumers had made at least one payment to a creditor under a settlement agreement and charged some consumers fees even though it did not negotiate a settlement. The bureau also alleged that the firm collected fees that were calculated on the consumer’s debt amount after their time of enrollment in one of DMB’s debt-settlement programs.
  • The firm failed to disclose the amount that a consumer must save before making a settlement offer and the time by which it would make a settlement offer; and deceived consumers about settlement fees, including by charging settlement fees greater than what was disclosed in the enrollment agreement.

The proposed judgment and order, if entered by the court, provides that a $7.7 million judgment against the firm would be suspended upon its paying consumers the $5.4 million in redress. It would also prohibit the firm from engaging in the unlawful and deceptive practices alleged. The CBPB said the nominal, $1 million civil money penalty is sought because of the firm’s limited financial resources.

The bureau added that by requiring the DMB Financial to pay a penalty of $1, the order may make consumers eligible for additional relief from the CFPB Civil Penalty Fund in the future, although that determination has not yet been made.

CFPB Takes Action Against Debt-Settlement Company for Charging Consumers Unlawful Fees

RR: Debt settlement, relief firm sued for abusive acts, practices (Dec. 2, 2020)