DMB Financial Sues CFPB to Stop Investigating Them

DMB Financial filed suit yesterday agains the Consumer Financial Protection Bureau (CFPB).

DMB Financial says, “In 2016, the Commonwealth of Massachusetts initiated an investigation against DMB that was designed to seek retribution for DMB’s Chief Operating Officer exercising his right to appear in front of the State Legislature to oppose legislation the Commonwealth’s Attorney General sought to have enacted. In 2018, the Commonwealth filed an action against DMB and sought a preliminary injunction with respect to a variety of DMB’s practices. After a full, evidentiary hearing, all of the Commonwealth’s 15 prayers for injunctive relief were denied.”

The court document says that after that action, the Commonwealth forwarded the information to the CFPB and “urged it to start its own investigation of DMB.”

On November 2, 2018, the CFPB did and issued a Civil Investigative Demand (CID) requesting documents and information.

Apparently, things came to a head in the last week, “Over the next year and one-half, pursuant to multiple CID’s, DMB provided the CFPB with thousands of documents and records related to its business and consumers. After almost two years of having to respond to the CFPB’s multiple demands, DMB was threatened on Friday, November 20, 2020 with a suit for alleged violations of the Telemarketing Sales Rule (“TSR”), 16 C.F.R., Part 310.”

The lawsuit filed by DMB Financial seeks “certain declarations that it is not violating the TSR and/or that the CFPB’s threatened claims otherwise have no merit.”

We Will Have to Wait

Obviously, we will have to wait to see how this shakes out and I’ll keep an eye on the case for any important updates.

The complaint filed states DMB Financial does comply with the Telemarketing Sales Rules (TSR) and is not in violation. It states DMB Financial is not an advance fee settlement company.

The document sheds some light on the dispute. It says, “On November 20, 2020, over two years after it began investigating DMB, the CFPB threatened to file an action and/or seek injunctive relief for several supposed violations of the TSR, including claims that:

  • Prior to March 2019, DMB failed to disclose to consumers how long it would be before DMB would make settlement offers to creditors;
  • Prior to March 2019, DMB failed to disclose to consumers the amount of money or % of debt a consumer would need to set aside before DMB would make settlement offers to creditors;
  • DMB collected fees for settling debts where the consumer was not required to make any payment to settle the debt; and
  • DMB received settlement fees before consumers had made their first payment to a creditor.”
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DMB Financial “disputes that it has engaged in such conduct, that such conduct violates the TSR and/or that such conduct would render DMB liable for restitution to consumers.”

DMB Financial is asking the Court for clarity that it has not violated the TSR and asks the Court to enter a judgment in its favor that says:

“A. Enter a judgment in its favor on all claims in this Complaint;

B. Declare, pursuant to 28 U.S.C. § 2201, that (i) DMB has not violated the TSR by: (a) prior to March 2019, failing to disclose to consumers how long it would be before DMB would make settlement offers to creditors, (b) prior to March 2019, failing to disclose to consumers the amount of money or % of debt a consumer would need to set aside before DMB would make settlement offers to creditors, and (c) collecting fees for settling debts where the consumer was not required to make any payment to settle those debts; (ii) DMB should not be enjoined from collecting fees for settling debts where consumers are not required to make any payment to settle those debts; and (iii) DMB is not required to make restitution to consumers to the extent that DMB took any fee prior to the time that such consumers made their first settlement payment; and

C. Award DMB Financial, LLC such other and further relief that justice so requires.”

You can read the complete complaint below.

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