The Consumer Financial Protection Bureau asked a Florida federal court on Friday to issue a $107 million final judgment against Orion Processing LLC, a bankrupt company embroiled in an alleged debt-relief scheme that cost consumers millions in what the bureau called “exorbitant, illegal upfront fees.”
The trustee overseeing Orion’s Chapter 7 case and the CFPB said that they reached this agreement to provide redress for consumers who were allegedly misled into believing Orion, doing business under the World Law Group name, would provide specialized legal consultation to settle or mitigate debt.
The judgment stems from a suit filed against Orion in September of 2015. The CFPB claimed that that World Law and its affiliates promised clients that the companies could reduce their debts with a team of experienced, local attorneys. To do so, the companies allegedly told consumers to stop paying their debts in favor of paying World Law a single monthly payment, with which it would negotiate debt settlements with the consumers’ creditors, the agency said.
But World Law and its affiliates often kept these payments as fees, in violation of the Dodd-Frank Act, as well as the Telemarketing and Consumer Fraud and Abuse Prevention Act, the complaint said. Instead, almost all of World Law’s customers were made to pay illegal upfront fees, including a $199 initial fee, a monthly attorney service fee of $85 and other “bundled legal service fees” which averaged 12% of the consumers’ outstanding debt.
In addition, World Law allegedly made false representations about the quality and level of service they purported to provide. Consumers rarely, if ever, met or communicated with actual lawyers.
Instead of providing the attorneys it had promised, World Law instead sent out generic legal pleadings and told customers to file them for themselves. This practice resulted in many of the filings being full of false statements or being rejected for failure to comply with local rules. In the end, many consumers lost their court cases, were left deeper in debt and some filed for bankruptcy, the bureau said.
Shortly after the CFPB’s lawsuit, World Law itself filed for bankruptcy. The CFPB in November 2015 filed a proof of claim in Orion’s bankruptcy proceeding, seeking at least $67 million for the company’s alleged illegal actions. In September, the court issued a default judgment against Orion after the company failed to answer the CFPB’s pleading. The $107 million monetary judgment will be counted as an allowed general unsecured claim in the company’s bankruptcy case, according to the motion.