A nationwide firm that promised consumers legal help with debt relief has been temporarily shut down by federal authorities. The firm, which goes by the name World Law, took $67 million in illegal upfront fees from at least 21,000 people, the Consumer Financial Protection Bureau alleges, while misleading consumers with promises that local lawyers would be available to help with their situation.
World Law charged “exorbitant, illegal upfront fees from vulnerable consumers suffering financial difficulties,” the CFPB alleges.
Consumers with debt who enrolled in World Law’s heavily advertised program were told to stop paying their bills and instead pay into a special account set up to be used later for debt settlement negotiations. But consumers rarely got relief via World Law, which siphoned big fees out of the consumers’ accounts. Initial fees were $199, the CFPB said, followed by an “attorney monthly service fee” of $84.95, along with a “bundled legal service fee” of 10% to 15% of the consumers’ outstanding balance.
Consumers rarely, if ever, actually spoke to attorneys, the CFPB said.
“As a result, consumers paid millions of dollars in illegal fees and suffered additional harms, including being subjected to collection calls, lawsuits, late fees, and lower credit scores,” the CFPB said.
A message left at a phone number listed for World Law was not immediately returned.
After the recession led to a rise in various debt negotiation practices that harmed consumers, advance fee collection by debt settlement firms was banned by the Federal Trade Commission in 2010. There was a loophole, however — law firms were still entitled to collect upfront fees. World Law exploited that loophole, the CFPB says.
“In or around July 2010, right before the (FTC) advance-fee ban went into effect, defendants developed a plan to avoid the advance-fee ban by continuing operations under the guise of providing legal services,” the CFPB alleges in its complaint. “Defendants then began promising consumers both debt relief services and legal representation, including by a local attorney, claiming to employ lawyers in every state. They also touted that consumers would receive the skill and expertise of a licensed lawyer to negotiate with creditors regarding their unsecured debts… ln reality, defendants do not provide the promised legal representation. Consumers rarely, if ever, communicate with a lawyer and the vast majority of services provided — if services are provided at all — are debt relief services provided by nonlawyers.”
The Bureau’s lawsuit names Derin Scott, David Klein, and Bradley James Haskins, who control World Law Group — which uses numerous names as part of an “interrelated maze of companies,” including Orion Processing, LLC, d/b/a World Law Processing, WLD Credit Repair, and World Law Debt; Family Capital Investment & Management LLC a/k/a FCIAM Property Management; World Law Debt Services, LLC; and World Law Processing, LLC.
The CFPB filed suit against the firm in August and obtained a temporary restraining order against it in early September. The legal action was made public Tuesday. The CFPB is seeking a permanent injunction against the company.
If you’re struggling with debt, there are plenty of reputable places to find help. Depending on your situation, you could consolidate your debt, get help from a debt settlement company or even get a balance transfer credit card to give you some breathing room to get your finances in order without incurring interest charges. Keep in mind that these options may require a good credit score, so it’s good to know where you stand before you apply. You can check your credit scores for free on Credit.com.
More on Managing Debt:
- The Credit.com Debt Management Learning Center
- Understanding Your Debt Collection Rights
- Top 10 Debt Collection Rights