Debt Relief Crackdown

One debt relief company may be out of  business thanks to a crackdown by the Consumer Financial Protection Bureau (CFPB).  American Debt Settlement Solutions, Inc. (ADSS) and its owner Michael DiPanni, headquartered in Florida, allegedly charged consumers illegal upfront fees for debt relief services. The CFPB says hundreds of consumers in a number of states were charged $500,000 in fees and in most cases received no help.

The CFPB filed a complaint in federal district court against ADSS and plans to ask the court to put the company out of business and impose a $15,000 civil penalty fine. The company apparently can’t repay the $500,000.

“Today we are taking action to halt a debt relief company we believe has been preying on financially vulnerable consumers,” said CFPB Director Richard Cordray. “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.”

Here’s what ADSS is allegedly did:

  • Misled consumers by falsely promising them it would begin to settle their debts within three to six months when, in reality, services rarely materialized.
  • Enrolled consumers despite knowing that their income level made it highly unlikely that they could complete the debt relief programs.
  • Collected upfront “enrollment” fees from consumers who ADSS knew could not afford the monthly payments required by these debt relief programs, causing the consumers to spend their last savings on fees for services from which they ultimately would not benefit.
  • Failed to settle these consumers’ debts within the promised time, forcing many consumers to drop out of the program and forfeit their “enrollment” fees without having received any debt relief services.

There are many more companies like this one out there.

Watch ConsumerMojo.com’s video Avoid Debt Settlement and Credit Repair Companies

 

Published by

Barbara Nevins Taylor

As the winner of 22 Emmy Awards and a slew of journalism honors and awards, I created ConsumerMojo.com to give you the straight story about complicated stuff. Tell us what you want to know and we'll get you the answers.