The CFPB filed on Thursday its first complaint under Dodd-Frank’s ban on abusive practices against American Debt Settlement Solutions, a Florida-based debt relief firm that allegedly lied and took advantage of consumers.
An agency investigation revealed that ADSS allegedly made promises to provide debt-relief services but never provided the services, charging consumers upfront fees with the knowledge that the consumer would be unable to make the monthly payments.
“If someone – a person or a company – takes unreasonable advantage of a consumer in certain ways or interferes with a consumer’s ability to understand a term or condition of a financial product or service, the Bureau may take enforcement action,” the CFPB said. “Today’s action is the first time the CFPB is enforcing this prohibition on abusive acts and practices.”
The CFPB’s investigation found that ADSS may have charged as much as $500,000 in fees to consumers in multiple states, and the watchdog said it plans to submit an order that would halt the firm’s operations and award a judgment against the company of $500,000.
Under Dodd-Frank, financial services firms are prohibited from engaging in deceptive, misleading or abusive practices, and the CFPB is authorized to enforce the prohibition.