(Added Freedom Debt Relief Policy Changes, Settlement Details, Claims, Case Citation, Signing)
July 9 (Reuters) – Freedom Debt Relief LLC, the largest provider of debt settlement services in the United States, agreed to pay $ 25 million to resolve U.S. regulatory claims that it was imposing inappropriate fees on consumers and had not paid their debts as promised.
The US Consumer Financial Protection Bureau said Tuesday that Freedom would pay a civil fine of $ 5 million and $ 20 million in restitution to settle his lawsuit. He also has a related consent order with the Federal Deposit Insurance Corp.
Freedom has neither admitted nor denied the wrongdoing in the settlement, which also resolves claims against Andrew Housser, co-founder and co-CEO of the San Mateo, Calif., Based company. Court approval is required.
Freedom, which is part of the Freedom Financial Network, said it will change some policies and disclosures in connection with the settlement and has worked with the CFPB to address its concerns.
Debt settlement companies negotiate with creditors to persuade them to accept less money than they are owed.
Freedom said in February it has negotiated more than $ 10 billion in consumer debt and registered more than 600,000 customers.
The CFPB had accused Freedom of misleading consumers about creditors’ willingness to negotiate, charging fees after consumers negotiated their own settlements, and falsely claiming that it only charged fees on settlements. debts he had negotiated.
He also accused Freedom of failing to tell consumers they can get the money deposited into their accounts back if they quit their debt settlement programs.
The CFPB said Freedom’s actions violated the Dodd-Frank Financial Reform Act of 2010 and a federal telemarketing law.
According to the CFPB, Freedom typically charged a fee of between 18% and 25% of what consumers owed on the day they signed up.
The CFPB sued Freedom and Housser in November 2017 under the agency’s director at the time, Richard Cordray.
The case is Consumer Financial Protection Bureau v Freedom Debt Relief LLC et al, US District Court, Northern District of California, No. 17-06484. (Reporting by Jonathan Stempel in New York; Editing by Chizu Nomiyama and Dan Grebler)