The Consumer Financial Protection Bureau filed a suit against a pair of attorneys and three law firms for violating the Telemarketing Sales Rule by collecting upfront fees for debt relief services.
In a complaint filed in federal court, the CFPB alleges that Howard Law, P.C., the Williamson Law Firm, LLC, and Williamson & Howard, LLP, as well as attorneys Vincent Howard and Lawrence Williamson, violated the Telemarketing Sales Rule.
Vincent Howard is president of Orange County, Calif.-based Howard Law and Lawrence Williamson heads the Williamson Law Firm, which is registered in Kansas. Both are part owners of Williamson & Howard, also based in Orange County.
The firms and attorneys allegedly collaborated with Morgan Drexen, Inc., which shut down in 2015 following the CFPB’s lawsuit against it.
The Telemarketing Sales Rule generally prohibits debt relief providers from charging a fee until they have actually settled, reduced or changed the terms of at least one of the consumer’s debts. It also limits the types of fees a debt relief provider can charge for already settled debts.
The CFPB’s complaint alleges that the defendants violated the Telemarketing Sales Rule by collecting illegal fees and deceiving consumers about being charged upfront fees. The attorneys collected “tens of millions of dollars” this way and often failed to settle any debts, the bureau said.
The defendants also allegedly assisted illegal debt relief practices by Morgan Drexen, Inc., and its president and CEO Walter Ledda, both of whom were named in the CFPB suit. They worked alongside Morgan Drexen and Ledda to collect illegal fees, and took over the operation after the CFPB halted Morgan Drexen’s and Ledda’s activities, the bureau said.
“The defendants exploited consumers who were already suffering financial difficulties by tricking them into paying steep, illegal fees,” said CFPB Director Richard Cordray. “We put a stop to this scam once already, and we intend to do it again.”