Standing in New York earlier this week, Richard Cordray, director of the Consumer Financial Protection Bureau (“CFPB”), announced the filing of a complaint against a debt-relief services company, as well as a referral of the company’s alleged criminal conduct to the Department of Justice. This first joint enforcement effort and referral of criminal activities is prescribed under the Dodd-Frank Act because the CFPB itself does not have the ability to prosecute criminal conduct.
Mission Settlement Agency and its principal allegedly provided little to no debt-relief services to consumers it charged. The CFPB also alleges that the company impersonated a government agency and charged unlawful advance fees to its consumers. The principal of the company allegedly told employees to sign up customers by any means, including lies about the cost and timing of fees. The CFPB Complaint asserts unfair and deceptive practices claims under Title X of Dodd-Frank and claims related to illegal advance fees under the Federal Trade Commission’s Telemarketing Sales Rule.
The referral to the United States Attorney for the Southern District of New York is the result of CFPB’s uncovering of alleged criminal activity. The torch is now passed to the Department of Justice to consider whether to prosecute the debt-relief services company and its principal. Director Cordray’s remarks contained express comments that the CFPB would be looking for future opportunities to collaborate with the DOJ.
Entities regulated by the CFPB now have an additional level of concern, and any questions about specific practices should be referred to Spilman or regulatory counsel.