These practices violate the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Telemarketing Sales Rule. The company also fails to clearly disclose consumers’ rights to their account funds when they withdraw from the program. But Freedom charges its full fee even when creditors simply stop collections without a settlement and when consumers negotiate settlements on their own. Freedom also tells consumers it will charge a fee only when it negotiates a debt settlement and consumers make a payment. In these instances, Freedom sometimes “coaches” consumers instead of dealing with creditors directly. Yet Freedom knows that some creditors refuse to negotiate with debt-settlement companies. The agreement Freedom offers to consumers claims that, in general, all creditors will negotiate with Freedom. When a debt is settled, Freedom charges consumers fees that range between 18 percent and 25 percent of the amount of debt the consumer owed on the day they signed up for the program. Freedom tells consumers that when the accounts have sufficient funds to make settlement offers, Freedom will negotiate with consumers’ creditors to persuade them to accept less than the actual amounts owed. Freedom requires customers enrolled in its debt-settlement program to deposit money into dedicated accounts with an FDIC-insured bank. Through telemarketing contacts with prospective customers, Freedom learns who their creditors are, the amounts owed to each, and the nature of the debts. Freedom claims that it has successfully negotiated and settled more than $7 billion in debts for more than 300,000 consumers. Andrew Housser is the company’s co-CEO and co-founder. Today’s lawsuit seeks to stop the deception and get compensation for consumers Freedom cheated.”įreedom Debt Relief, part of Freedom Financial Network and based in San Mateo, California, is the largest debt-settlement services provider in the United States. “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. “Freedom took advantage of vulnerable consumers who turned to the company for help getting out of debt,” said CFPB Director Richard Cordray. The CFPB is seeking compensation for harmed consumers, civil penalties, and an injunction against Freedom and Housser to halt their unlawful conduct. The CFPB 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 Consumer Financial Protection Bureau (CFPB) today filed a lawsuit against Freedom Debt Relief, the nation’s largest debt-settlement services provider, and its co-CEO Andrew Housser for deceiving consumers.
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