CFPB Settles Lawsuit Against Freedom Debt Relief

July 9, 2019

On Tuesday, July 9, 2019, the CFPB settled its lawsuit against Freedom Debt Relief, LLC, the nation’s largest debt-settlement services provider.


The Bureau’s lawsuit alleged that Freedom Debt Relief violated the Telemarketing Sales Rule by charging advance fees and failing to inform consumers of their rights to funds they deposited with the company. The Bureau also alleged that Freedom Debt Relief violated the Consumer Financial Protection Act of 2010 by charging consumers without settling their debts as promised, charging consumers after having them negotiate their own settlements with creditors, and misleading consumers about the company’s fees and its ability to negotiate directly with all of a consumer’s creditors.


The settlement will prohibit Freedom Debt Relief from conducting similar behavior in the future, in addition to requiring Freedom to pay $20 million in customer restitution and $5 million to the civil money penalty fund. The Bureau will remit $493,500 of the $5 million civil penalty it assessed in light of the penalty that the company was ordered to pay the FDIC in a similar consent order.