Friday, June 14, 2013

American Debt Settlement Solutions

The Consumer Financial Protection Bureau (CFPB) has settled the claims asserted in its recently filed complaint against American Debt Settlement Solutions, Inc. (ADSS) and Michael DiPanni, owner of the Florida debt relief company. The complaint alleges that American Debt Settlement Solutions, Inc. misled consumers and charged illegal fees for its services. DiPanni charged consumers “enrollment” fees for work that was never allegedly performed or completed.

In the complaint, American Debt Settlement Solutions, Inc. is accused of violating the Federal Trade Commission’s Telemarketing Sales Rule (TSR) and the Dodd-Frank Act by charging the illegal fees upfront and not performing the services promised. The company is charged with misleading consumers by stating that it would settle their debt within three to six months, collecting upfront enrollment fees, and then failing to settle the debt within the timeframe originally promised. This was considered “abusive” because ADSS targeted consumers ADSS knew could not afford the debt relief program offered. CFPB believes that these deceitful tactics caused the consumers to fall further into debt and receive no benefit from the “enrollment” fee they paid.

Under the terms of the settlement, ADSS will be required to halt operations, pay a $15,000 fine, and will no longer be able to provide debt relief services to consumers. The proposed consent order would award a judgment against the company of approximately $500,000 (the amount consumers paid to the company for services).

In a press release, CFPB Director Richard Cordray, states, “Today we are taking action to halt a debt-relief company we believe has been preying on financially vulnerable consumers. Consumers struggling to pay off a debt are among the most at risk and deserve better. We will continue to crack down on this type of harmful behavior.”