The attorney general of Massachusetts reached a settlement with a payment processing company that allegedly assisted a debt settlement company engaged in charging consumers premature and inflated fees.
In 2021, debt settlement company DMB Financial LLC entered into settlements with the Massachusetts AG and the Consumer Financial Protection Bureau (CFPB) over claims that it engaged in abusive and deceptive tactics by charging consumers “significant” fees for negotiating settlements with creditors and enrolling consumers in “unaffordable” programs, leaving them “in worse financial condition than before.” The settlement with the Massachusetts AG resulted in a civil penalty of $1,000,000 and repayment of $5.4 million to consumers.
The Massachusetts AG then pursued payment processing company Global Holdings LLC for its role in processing settlement and fee payments for consumers enrolled in DMB Financial’s debt settlement services. The AG alleged that Global Holdings transferred unlawful fee payments to DMB Financial despite having knowledge of the settlement provider’s misconduct and even after the AG’s office sued the company.
The settlement requires Global to pay $600,000 to the commonwealth and to make changes to its technological platform that will prevent it from transferring untimely fees from any Massachusetts consumer to any debt settlement company. Specifically, the settlement requires the payment of a settlement fee to a debt settlement provider to be linked to the initial payment of the settlement or installment payment amount to a specific creditor. The goal of the change is to ensure that at least one payment to each of a consumer’s creditors enrolled in a debt settlement program is made pursuant to a negotiated settlement with that specific creditor before the debt settlement company is paid any or all of its fee for negotiating the settlement of the specific debt. The change must be implemented within six (6) months of the settlement.
A copy of the Assurance of Discontinuance filed against Global Holdings can be accessed by clicking here.
