Debt-relief companies being sued for posing as federal agencies, charging illegal advance, and lying about results
October 12, 2017
Two companies operating under the name “FDAA,” a service provider, and their owners are being sued for falsely presenting FDAA as being affiliated with the federal government. The lawsuit also alleges that FDAA’s so-called “debt validation” programs violates the law by falsely promising to eliminate consumers’ debts and improve their credit scores in exchange for thousands of dollars in advance fees.
The Consumer Financial Protection Bureau’s lawsuit seeks to end the deceptive practices, return money to harmed consumers, and impose penalties.
“FDAA and its owners lied to financially vulnerable consumers to line their pockets with cash,” said Richard Cordray, director of the bureau.
The companies being sued are Federal Debt Assistance Association LLC and Financial Document Assistance Administration Inc. along with Clear Solutions Inc., which processed consumer payments for the FDAA companies and provided other services.
Under federal law, when a debt has been disputed, the debt collector is required to stop collection until it can get verification of the debt. But the FDAA companies falsely claimed to consumers that the money owed would be eliminated or reduced if the creditor didn’t respond to the FDAA companies’ satisfaction. These practices violate federal law.
In addition to deceiving consumers about an affiliation with the federal government and the results that could be achieved, FDAA allegedly failed to make proper disclosures about not paying debts. In addition, the companies are being charged with taking illegal advance fees for debt-relief and credit-repair services.
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