Court

District Court: CFPB May Hold Law Firm Owners Individually Liable for Alleged Violations

HIGHLIGHTS:

  • The U.S. District Court for the Western District of Wisconsin has ruled that the Consumer Financial Protection Bureau (CFPB) may hold the owners of two law firms offering debt-relief services liable for alleged violations of federal consumer protection laws.
  • The CFPB brought the action against two law firms and four lawyers associated with them, alleging violations of the Consumer Financial Protection Act of 2010 (CFPA) and Regulation O, which governs mortgage assistance relief services.
  • The court ruled that the defendants misrepresented their services to consumers and charged consumers impermissible advance fees.

The U.S. District Court for the Western District of Wisconsin ruled on July 20, 2016, that the Consumer Financial Protection Bureau (CFPB) may hold the owners of two law firms offering debt relief services liable for alleged violations of federal consumer protection laws. In a 54-page opinion, the court also ruled that the defendants misrepresented their services to consumers and charged consumers impermissible advance fees. In its ruling, the court punted on the question of whether the defendant law firms’ debt relief services qualified as the practice of law and thus were outside of the CFPB’s authority. Lastly, the court also held that the individual defendants may be liable not just for illegal profits, but for all of the revenue generated by the defendants’ alleged illegal practices.

Rest here…

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