Debt Relief Industry Regulatory Alert – July 2, 2021

Georgia and the CFPB Reach Consent Agreement with a Debt Settlement Company for Alleged Violations in Connection with its Debt Relief and Credit Repair Services

The State of Georgia alongside the Consumer Financial Protection Bureau (the “CFPB”) have entered into a consent agreement with a debt settlement company (the “Company”) on June 29 , 2021, for allegedly violating the Telemarketing Sales Rule, the Fair Business Practices Act, and Georgia’s Debt Adjustment Act by targeting financially vulnerable consumers, charging more than the legally allowed fee cap, failing to distribute money collected to consumers’ creditors, and illegally offering credit repair services. The consent judgment will require the Company to permanently cease doing business in the State of Georgia and pay $150,000 in civil penalties. If however, the Court determines that the Company has materially misrepresented or omitted its assets or financial statements in any way, it will be required to pay $30 million in consumer restitution and $8.1 million in civil penalties to the State of Georgia.

Florida Greatly Expands its Telemarketing Laws

Florida’s changes to its telemarketing laws have become effective as of July 1, 2021. The changes include an expansion of Florida Statute § 501.059, entitled “Telephone Solicitation,” which will now include a restriction on autodialed calls without express written consent and a very broad private right of action for all provisions of the statute. The inclusion of a broad private right of action has now made Florida’s telemarketing laws more expansive than the federal Telephone Consumer Protection Act (the “TCPA”) as consumers may now sue solicitors for a number of violations. These violations include using an autodialer without express written consent, failing to properly identify themselves, failing to prevent calls on Florida’s DNC list, and failure to heed to a DNC request, among others.

Proposed California Bill to Establish the Fair Debt Settlement Practices Act Amended to Remove Prohibition on Referrals 

On July 1, 2021, proposed California Assembly Bill No. 1405 to establish the Fair Debt Settlement Practices Act was amended in the California Senate to eliminate the essential prohibition of the operation of frontend debt settlement companies in the State. The previous version of the Bill would have made it an abusive or deceitful act for a debt settlement provider to offer, pay, or give any compensation to any person for referring any prospective consumer to the debt settlement provider. This clause has now been removed. The Bill has now been re-referred to the Senate Committee on the Judiciary for review. If you wish to read the entire text of the newly amended proposed legislation, please click on the following link:

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