On March 13, the CFPB filed a brief in an Illinois federal court, reinforcing its arguments for a $43 million judgment against the founder of a now-defunct debt relief company. The CFPB contends that the company’s founder controlled its deceptive telemarking operations and should be held personally liable under the Telemarketing Sales Rule (TSR) and the Consumer Financial Protection Act (CFPA). 

The lawsuit, originally filed in 2020, alleges that the company engaged in unlawful advance fees and deceptive practices targeting student-loan borrowers. According to the CFPB, the company: 

• Misrepresented its services. The company allegedly promised lower student loan payments, full debt forgiveness, and improved credit scores, but often failed to deliver these results. 
• Charged illegal upfront fees. Consumers were required to pay fees before receiving any debt relief services, in violation of federal law. 
• Failed to provide promised relief. Many consumers paid significant amounts for services that did not produce the advertised benefits. 

In its brief, the CFPB reiterated its request for the full $43 million judgment, which includes $2M in consumer redress, arguing that it should be based on total consumer harm rather than net profits. The Bureau also seeks a $41M in civil penalty and rejected claims that its penalty request infringes on the Seventh Amendment right to a jury trial. 

Putting It Into Practice: Despite the CFPB’s recent withdrawal of several lawsuits (previously discussed here and here), its decision to proceed with this enforcement action indicates that certain regulatory priorities, including debt relief and Military Lending Act violations (previously discussed here and here), remain intact.

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