CFPB Obtains Injunction Against World Law Group
The CFPB recently obtained preliminary injunctions against debt-reduction company World Law Group, its affiliates and its owners, thereby freezing the company’s assets and stopping all further operations pending the outcome of a CFPB lawsuit against the company. The injunctions, issued on September 2 and September 14, come on the heels of the complaint filed by the agency last month in the U.S. District Court for the Southern District of Florida. In the complaint, the CFPB alleges that World Law Group operated an illegal debt-relief scheme that charged consumers “exorbitant” upfront fees and rarely delivered promised services, ultimately collecting over $67 million in illegal fees from at least 21,000 consumers.
According to the CFPB, World Law Group promised to provide potential clients with teams of attorneys, including local counsel, to negotiate with their creditors and obtain favorable debt settlements. Clients were instructed to stop paying creditors and make monthly payments to World Law Group in order to receive the company’s services. The company told clients that these upfront payments would be rolled into an account that would be used to negotiate settlement of their debts. According to the CFPB, World Law Group collected fees from these payments before providing any actual debt-relief services, and generally failed to obtain the promised debt reductions for its clients. Additionally, the CFPB contends that most of the company’s work was performed by non-attorneys and that consumers rarely, if ever, spoke to actual lawyers. When creditors sued for payment, World Law Group allegedly provided its clients with boilerplate pleadings and instructed them to file the pleadings themselves.
The CFPB charges that World Law violated the Telemarketing and Consumer Fraud and Abuse Prevention Act (Telemarketing Act) by collecting illegal upfront fees. The Federal Trade Commission enacted the Telemarketing Act in 2010 in an effort to protect consumers against aggressive debt-collection companies by banning those companies from charging upfront fees for their services. Advance fees for legal services were not banned by the Telemarketing Act, and World Law attempted to exploit this loophole by stating that collected fees would be used to pay lawyers, according to the CFPB. The CFPB estimates that 99 percent of the consumers who enrolled in World Law’s program were charged illegal upfront fees. In addition to violating the Telemarketing Act, the CFPB contends that World Law Group’s false promises of legal representation violated the Dodd-Frank Act’s prohibitions against unfair, deceptive, or abusive acts and practices.
The injunctions provide broad relief to the CFPB. Among other things, they freeze all of the company’s assets, order the repatriation of all foreign assets, and order that all company operations be halted. The injunctions also order the appointment of an equity receiver (Robb Evans and Associates, LLC), who is empowered to take control over all assets and business affairs of World Law Group. Although the case technically remains pending, the broad relief granted by the court effectively resolves the matter in the CFPB’s favor.