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U.S. consumer agency sues Freedom Debt Relief for misleading consumers

Reuters  |  WASHINGTON 

By Pete Schroeder

(Reuters) - The U.S. Consumer Financial Protection Bureau said on Wednesday it filed a lawsuit against Freedom Debt Relief, the largest U.S. debt-settlement services provider, and its co-Chief Executive Andrew Housser, alleging that they deceived consumers.

The said its suit alleges "that Freedom charges consumers without settling their debts as promised, makes customers negotiate their own settlements, misleads them about its fees and the reach of its services and fails to inform them of their rights to funds they deposited with the company."

The agency is also seeking compensation for affected consumers, civil penalties, and an injunction against the San Mateo, California-based company and Housser to end their unlawful conduct, it said in a statement.

Freedom Debt Relief did not immediately respond to a request for comment.

The accused the company of offering to negotiate debt settlements on behalf of consumers while knowing that some companies refuse to negotiate with debt-settlement companies as third parties. Furthermore, the alleged that the company leads consumers to believe its negotiators will work on behalf of consumers, even when some consumers merely receive "coaching" before having to negotiate on their own.

"Freedom took advantage of vulnerable consumers who turned to the company for help getting out of debt," said Director Richard Cordray. "Freedom deceived consumers about its clout with creditors that it knows do not negotiate with debt-settlement companies, made some customers negotiate on their own, and misled consumers about its fees and their accounts. Today's lawsuit seeks to stop the deception and get compensation for consumers Freedom cheated."

The also said the company misleads consumers on its fees by claiming payment is only required when it negotiates a settlement. Rather, the said the company charges a fee when creditors stop collection efforts even without a settlement, or when the company took no action on the consumer's account.

(Reporting by Eric Walsh and Pete Schroeder; Editing by David Gregorio)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Thu, November 09 2017. 06:17 IST
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