Robby H. Birnbaum , a shareholder with Greenspoon Marder, PA, reached a landmark settlement with the Consumer Financial Protection Bureau (CFPB) on behalf of American Debt Settlement Solutions, Inc. (ADSS), a consumer debt relief provider alleged to have engaged in abusive practices. This is the second major case that Greenspoon Marder has settled for its clients with the CFPB.
After nearly a year of investigation and negotiations, the CFPB filed a six-count complaint against ADSS alleging violations of the federal telephone sales rule, trade and consumer protection laws. The lawsuit was immediately followed by the entry of a Stipulated Final Judgment and Order which settled the case and ended the investigation. The settlement was a significant victory for ADSS and its principal, requiring the payment of only $15,000 along with a suspended judgment of $500,000 and related conduct relief.
The suspended judgment was negotiated by Birnbaum to relieve any significant financial burden on the Defendants and provide the CFPB a tool to enforce the conduct relief that it sought. “Coupled with an effective compliance program setup by our law firm’s Regulatory Compliance Department, the CFPB seemed comfortable with the lesser financial penalty,” explained Birnbaum.
The CFPB was created by the Dodd-Frank Wall Street and Consumer Protection Act to implement and enforce federal financial consumer protection laws. As part of the CFPB’s comprehensive effort to police the consumer financial industries, the CFPB brought its complaint against ADSS alleging ADSS engaged in deceptive and abusive trade practices and that it violated the recently amended Telephone Sales Rule which precludes most debt relief providers from charging fees in advance of settling their customers’ debt(s).
Birnbaum explained, “This is the first time the CFPB has brought an enforcement action alleging an entity engaged in “abusive” conduct, and the client looked to Greenspoon Marder to protect them. Until now it was not known how the CFPB would enforce its expanded “abusive” definition, and I am proud that we were able to establish some clearer guidelines for our clients and other businesses. These guidelines were understood through our closed-door negotiations with the CFPB, and we have already started aggressively rolling them out to our other financial practice and banking clients.” Birnbaum continued, “Using what we have learned from this case and our ongoing close communications with CFPB enforcement staff, we have initiated comprehensive and upgraded compliance initiatives with many of our clients to better handle the CFPB’s concerns. All in all, the clients understand it and are willing to make the changes necessary to avoid what we have now well-defined with the CFPB as an additional consumer protection.”
Over the past 25 years, Greenspoon Marder’s Regulatory Compliance Department has handled and resolved thousands of FTC, State Attorneys’ General and, most recently, CFPB matters. Prior to the ADSS case, Birnbaum settled the CFPB’s first landmark case for a Miami financial services business, in which the CFPB established that it could engage in enforcement actions with its state attorneys’ general partners. The case involved five state AG’s along with many CFPB enforcement attorneys. The CFPB touted the settlement as a landmark effort to cooperate with their state enforcement partners. The resulting settlement left Greenspoon Marder’s client in a compliant and continuing business, using another enhanced compliance plan setup by the firm to predict and accommodate CFPB concerns.
Birnbaum explained, “In light of the two major CFPB settlements and half a dozen other federal inquiries on my desk, we are working closely with the government agencies and our clients to understand their concerns and quickly bridge any compliance gaps. There is no greater professional pride for my firm than helping a business to get out in-front of regulatory concerns, and leading the way on satisfying the most pressing consumer protection requirements, especially relating to this new expanded definition of what an “abusive” practice is. We are efficiently handling the nitty-gritty of preventing these ‘abusive’ practices now.”
Greenspoon Marder, based in Florida, is a civil practice law firm with over 150 attorneys and over 500 support staff. The Firm’s attorneys practice in the areas of Regulatory Compliance, Financial Services and Banking, Complex Litigation, Real Estate, Zoning and Land Use, Corporate, Tax and Transactional, Trusts and Estates, Resort Development, and myriad of other civil practice areas. The Regulatory Compliance Department is well respected throughout state and federal government agencies, focusing on FTC, FCC, CFPB, State AG, Banking and Credit Regulatory Agencies, State Bar, MSB, and FDA work. Robby H. Birnbaum is based in the Firm’s Fort Lauderdale Office, and can be reached at (954) 343-6959 or [email protected]
About Greenspoon Marder Greenspoon Marder LLP is a full-service law firm with over 240 attorneys and more than 20 office locations across the United States. With operations from Miami to New York and from Denver to Los Angeles, our firm attracts some of the nation’s top talent in key markets and innovation hubs. Our core practice areas include Real Estate, Litigation, and Transactional Services, complemented by the capabilities of a full-service firm. Greenspoon Marder has upheld a spot on The American Lawyer’s Am Law 200 as one of the top law firms in the U.S. since 2015, and our goal is to provide exceptional client service by developing a thorough understanding of each client’s business needs and objectives in order to provide strategic, cost-effective solutions.
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