AG’s office secures $1M settlement against debt collection company

Crime

BOSTON (WWLP) – Attorney General Maura Healey announced a first-of-its-kind settlement that secures $1 million in relief and requires extensive changes to business practices of a debt settlement company accused of harming financially-distressed consumers in Massachusetts.

The consent judgment was entered in Suffolk Superior Court, with DMB Financial, LLC, and its chief operating officer, Daniel Kwiatek. It resolves allegations by the AG’s Office that DMB charged inflated and premature fees, enrolled consumers who were unable to benefit from its program, and failed to disclose the harms consumers may experience after enrolling in its program—including being sued by creditors and damaging their credit.

DMB, which operates in Massachusetts and more than a dozen other states, enrolls vulnerable consumers—including people who are unemployed or underemployed, elderly, sick, disabled, or living on a limited or fixed income—in debt settlement programs that they are often unable to afford or complete. DMB claims to have served 30,000 consumers nationwide.

The AG’s Office filed a lawsuit against DMB in 2018, later amended in 2019, after an investigation by the AG’s Office revealed that DMB engaged in numerous unfair debt settlement practices, including overcharging consumers, grossly misrepresenting the value of its services, and failing to make critical disclosures to consumers about the harms they may suffer due to enrolling in DMB’s program.

According to the AG’s Office, DMB charged consumers significant fees for negotiating settlements with their creditors, which it typically collected before consumers had achieved any debt forgiveness. DMB also directed consumers to stop paying their debts and to stop communicating with creditors, and to instead make payments into a dedicated “savings” account administered by payment processor Global Client Solutions. Many consumers who DMB enrolled in its program were unable to complete the program and did not emerge “debt free,” as DMB advertised. Instead, the AG’s Office alleged that, DMB knowingly and regularly enrolled consumers in unaffordable programs that charged substantial fees and left them in worse financial condition than before. The AG’s Office also alleged that DMB engaged in the unauthorized practice of law by continuing to represent consumers after they were sued in relation to an enrolled debt.

Under the terms of the consent judgement, DMB is required to pay $1 million to the Commonwealth, and will implement significant business practice changes, including prohibiting DMB from:

  • Requesting and receiving inflated or premature fees, in violation of Federal Trade Commission regulations;
  • Failing to refund a proportionate amount of any settlement fee collected by DMB if the consumer does not complete making payments on that settlement;
  • Making deceptive or unsubstantiated claims about DMB’s ability to settle debts;
  • Failing to make relevant disclosures on its website and in any materials to prospective enrollees in DMB’s program; and
  • Advising, representing or negotiating on behalf of a consumer who is sued for nonpayment of a debt, and failing to provide consumers who are sued with a list of resources.
  • Today’s settlement also requires DMB to submit annual reports to the AG’s Office to ensure compliance with the terms.

Consumers eligible for relief under today’s settlement will be contacted by the AG’s Office. Consumers with questions about settlement eligibility should contact AG Healey’s consumer hotline at 617-727-8400.

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