Debt Settlement Related

Freedom Debt Relief Finally Puts an End to CFPB Lawsuit With a Settlement

Written by Steve Rhode

In 2017 Freedom Debt Relief and Andrew Houser were sued by the Consumer Financial Protection Bureau.

It’s over. The CFPB has reached a settlement with Freedom Debt Relief. The mutually agreed settlement states:

“The Company Defendant must Clearly and Prominently disclose to consumers before Enrollment:

a. that in some instances, the Company Defendant may request that the consumer negotiate directly with the Creditor; and

b. that if the Company Defendant requests that the consumer negotiate directly with the Creditor, the consumer may decline to negotiate with the Creditor and either request that the Company Defendant continue attempts to negotiate a settlement of the Enrolled Debt with the Creditor or withdraw the Enrolled Debt without charge or penalty at any time before it is settled.” – Source

“The Company Defendant must, before Enrollment, Clearly and Conspicuously disclose to each consumer that if the consumer withdraws from the Company Defendant’s debt-relief program, the consumer is entitled to receive all funds in the Settlement Account other than funds earned by the Company Defendant in compliance with 16 C.F.R. § 310.4(a)(5)(i)(A) through (C).”

Freedom Debt Relief has agreed to pay $20 Million “for the purpose of
providing restitution to Affected Consumers.”

It appears that consumers due refunds from this settlement will be identified in documents to be supplied to the CFPB, “Within 60 days of the Effective Date, the Company Defendant must submit to the Enforcement Director for review and non-objection a comprehensive written Redress and Compliance Plan (a) for identifying Affected Consumers and the amount of any Qualifying Fee paid by each consistent with this Order.”

In addition, Freedom Debt Relief has agreed to pay ” a civil money penalty of $5,000,000 to the Bureau, of which $493,500 shall be remitted in light of the civil money penalty paid under the FDIC Consent Order.”

The settlement agreement says “The facts alleged in the First Amended Complaint will be taken as true and be given collateral estoppel effect, without further proof, in any proceeding based on the entry of the Order.”

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The CFPB has said, “The Bureau’s lawsuit alleged that Freedom Debt Relief violated the Telemarketing Sales Rule by charging advance fees and failing to inform consumers of their rights to funds they deposited with the company. The Bureau also alleged that Freedom Debt Relief violated the Consumer Financial Protection Act of 2010 by charging consumers without settling their debts as promised, charging consumers after having them negotiate their own settlements with creditors, and misleading consumers about the company’s fees and its ability to negotiate directly with all of a consumer’s creditors. Today’s settlement enjoins Freedom Debt Relief from engaging in this conduct in the future.” – Source

And now that’s done.

About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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