When you’re constantly bombarded with calls about your debts, signing up with a debt settlement company can seem like the easiest way to handle them. However, Reuters reported that the Consumer Financial Protection Bureau (CFPB) filed a lawsuit against Freedom Debt Relief and its co-Chief Executive Andrew Housser this month.
Freedom Debt Relief is one of the largest debt settlement companies in the United States and is based in San Mateo, California. They opened in 2002. According to their website, they “resolved over $6 Billion” in debts.
The lawsuit alleges Freedom Debt Relief deceived consumers by promising to settle their customers’ debts, but failing to do so. Here are more allegations from the lawsuit:
- The company promised to negotiate settlements with creditors, but the service actually required the consumer settle their own debts;
- It misled its customers regarding the fees they charge. The company made consumers believe they only had to pay a fee when the debt got settled. Instead the company charges even when they took no action to settle the debt;
- It misled its customers regarding the extent of its services;
- The company failed to tell customers that funds held by Freedom Debt Relief are the funds of the customer;
- It failed to notify its customers that some of the creditors hired to settle debts with had previously refused to negotiate to settle debts with third parties;
- It lead the consumer to believe it had negotiators hired to settle the debts. In reality, Freedom Debt Relief just gave tips to the consumers on how to settle their own debts.
The CFPB seeks monetary damages for affected consumers, civil penalties, and an injunction against Freedom Debt Relief to make them stop their allegedly unlawful activities. These activities include the company’s “ability” to actually negotiate a settlement with a creditor, when it has no special expertise or knowledge to do so.
If you have debts that you cannot afford to pay or you are robbing Peter to pay Paul, call one of the attorneys at Bond & Botes to schedule a free consultation. We are knowledgeable, local attorneys who go over all of your options. We also help to settle your debts, budget and file for bankruptcy. Our attorneys have helped many consumers in Alabama, Tennessee and Mississippi over the last 25 years.
Cynthia T. Lawson is the Managing Partner of the Bond & Botes Law Offices location in Knoxville, Tennessee. She holds a Bachelor of Science from East Tennessee State University, and a Juris Doctorate from University of Memphis, Cecil C. Humphreys School of Law. She currently serves as a Mentor for the Moment in bankruptcy.Read her full bio here.