WASHINGTON — The Consumer Financial Protection Bureau won a preliminary court injunction against several companies that the agency says ran a "debt-relief scheme" that imposed "exorbitant, illegal" fees on consumers, the agency said Tuesday.
The CFPB's lawsuit against World Law Group, its principals and a web of related companies alleges that the defendants claimed they could help consumers negotiate debt settlements but failed to provide promised legal representation and rarely resolved outstanding credits.
"We took action today against World Law Group for an alleged debt relief scheme that lured consumers with false promises of help from lawyers and collected millions in illegal upfront fees," CFPB Director Richard Cordray said in a press release. "We are seeking to put an end to this scheme and prevent more consumers from being harmed."
The suit names three individuals — Derin Scott, David Klein and Bradley James Haskins — who, the CFPB says, control World Law Group. The agency claims the defendants work through other interrelated companies, including Orion Processing LLC; Family Capital Investment & Management LLC a/k/a FCIAM Property Management; World Law Debt Services LLC; and World Law Processing LLC.
The bureau's complaint said World Law allegedly instructed consumers to halt paying debts and instead make one monthly payment to the company to assist lawyers in negotiating settlements. "According to the complaint, World Law unlawfully kept many of these payments as fees before providing debt-relief services," the CFPB said. "As a result, consumers paid millions of dollars in illegal fees and suffered additional harms, including being subjected to collection calls, lawsuits, late fees, and lower credit scores."
The agency alleges that 99% of consumers who enrolled in World Law's debt-relief services were charged illegal fees, including a $199 "initial fee" collected during the first three months, and an "attorney monthly service fee" of $84.95. Also included were "bundled legal service fees" ranging from 10% to 15% of a consumer's outstanding debt balance, the CFPB said.