PROVIDENCE – The nation’s largest debt settlement services provider, Freedom Debt Relief LLC, has agreed to pay $20 million in restitution to affected consumers and a $5 million civil money penalty to settle a lawsuit by the U.S. Consumer Financial Protection Bureau.
The settlement comes about a decade after California-based Freedom Debt Relief agreed to refund more than $38,000 to 38 Rhode Island customers to settle an investigation into its business practices by the state Department of Business Regulation.
In the new case, the Consumer Financial Protection Bureau alleged in a lawsuit that Freedom Debt Relief violated federal telemarketing rules by charging advance fees and failing to inform customers of their rights to funds they deposited with the company.
The bureau also alleged that Freedom violated the Consumer Financial Protection Act of 2010 by charging customers without settling their debts as promised, charging customers after having them negotiate their own settlements with creditors, and misleading customers about the company’s fees and its ability to negotiate directly with all of customers’ creditors.
The settlement enjoins Freedom from engaging in such conduct in the future.
The company was founded in 2002 by Stanford Business School graduates Andrew Housser and Brad Stroh, who continue to serve as the company’s co-CEOs, according to the company’s website.
Scott Blake is a PBN staff writer. Email him at Blake@PBN.com.
