WASHINGTON, D.C. — The Consumer Financial Protection Bureau (CFPB) took action this week against an online debt-settlement company for taking advantage of consumers, failing to disclose its relationship to certain creditors, and steering consumers into high-cost loans offered by affiliated lenders.
The CFPB filed a complaint in federal district court alleging that SettleIt, Inc. engaged in abusive acts or practices under the Consumer Financial Protection Act of 2010 (CFPA) and violated the Telemarketing Sales Rule (TSR). The Bureau and SettleIt filed a proposed order that, if entered by the court, would require SettleIt to return at least $646,000 in fees to consumers, pay a $750,000 civil penalty, and stop settling debts for creditors with which it shares an ownership interest.
“SettleIt’s strategy of steering consumers into sweetheart deals with its confederates was illegal,” said CFPB Director David Uejio. “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.”
SettleIt, Inc. presents itself as an independent debt-settlement company that helps consumers negotiate with creditors like CashCall and LoanMe. But SettleIt is affiliated with CashCall and LoanMe – the same individual owns 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. The CFPB also alleges that SettleIt 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. SettleIt kept consumers in the dark about its relationships with CashCall and LoanMe, and it even included language in call scripts saying “we are not owned or operated by any of your creditors.”
In its complaint, the CFPB alleges that this conduct violated the CFPA and the TSR. The proposed order would provide relief for harmed consumers, penalize SettleIt for its wrongdoing, and prohibit SettleIt from committing these acts in the future.
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