CFPB Requests Default Judgment Against Debt Settlement Company

The Consumer Financial Protection Bureau (CFPB) is moving forward with its case against World Law Group, asking a Florida federal court this week to issue a default judgment against several affiliates of the debt settlement company. The CFPB is asking the U.S. District Court of the Southern District of Florida to issue a judgment against Orion Processing LLC, Family Capital Investment & Management LLC, World Law Debt Services LLC, and World Law Processing LLC, alleging that they collectively scammed consumers out of millions of dollars and should pay approximately $147 million in penalties.

The case was initially brought by the CFPB against World Law Group in August 2015, after the Bureau said the debt settlement company collected some $67 million in up-front fees from consumers for “legal services” and then did little to help those consumers pay their debt. Specifically, the CFPB alleged that World Law Group violated the FTC’s Telemarketing Sales Rule (TSR) and UDAAP under Dodd-Frank by charging illegal upfront-fees and promising legal representation without intending to deliver such representation.

At the time the suit was filed, CFPB Director Richard Cordray criticized World Law Group by saying they “lured consumers with false promises of help from lawyers and collected millions in illegal upfront fees.”

In Tuesday’s request for a default judgment, the CFPB refers to the World Law Group’s “blatant violations of federal law, their bad faith conduct, and the significant harm resulting from their illegal activity,” saying the “gravity of this scheme was tremendous” and that the company “targeted financially-distressed consumers who were struggling to pay their bills” and “bilked these consumers” out of their money.

As insideARM reported in September, the U.S. District Court of the Southern District of Florida responded to the CFPB’s initial lawsuit by issuing a temporary injunction against World Law Group, freezing company assets. Since then, the debt settlement company and its affiliates have failed to respond to the lawsuit or defend themselves. The CFPB is thus asking the court to move forward and issue a default judgment, saying in Tuesday’s filing that “default judgment is appropriate here” because World Law Group has “failed to participate in the litigation in good faith.”

insideARM Perspective

insideARM applauds the CFPB for pursuing this matter.  There are many legitimate debt settlement/debt relief companies.  However, there are also many other companies that engage in the conduct alleged in this case. These companies promise to eliminate most or all of the consumers’ debt balance but in reality they are only in business to collect upfront fees.

It is difficult to turn on a radio or go to the Internet without listening or seeing an ad promoting these “services.” With taglines like, “You have the absolute right to settle your accounts,” or “The Obama administration has recently passed laws making it your absolute right to settle your debts,”  the slick marketing campaigns work. The numbers involved in the above case prove that consumers believe them.

insideARM would suggest that consumers thinking about debt settlement, go to www.ftc.gov and search for “Debt Relief Services” before consulting with any debt settlement or debt relief company.