A debt-settlement firm owned by the founder of the nonbank lender CashCall agreed to pay a $750,000 fine to address claims it steered consumers into high-cost loans from affiliated lenders and failed disclose relationships with affiliated lenders.
SettleIt, an online company, also agreed to reimburse consumers $646,000 in fees under a proposed settlement the Consumer Financial Protection Bureau filed Tuesday in the U.S. District Court for the Central District of California.
The CFPB had alleged that SettleIt abused thousands of consumers by claiming to be independent while negotiating to settle their debts with other lenders. The company marketed and refinanced consumers into loans from nonbank lenders CashCall and LoanMe without disclosing they were affiliated companies, the bureau claimed.
SettleIt's owner, J. Paul Reddam, also owns
“SettleIt’s strategy of steering consumers into sweetheart deals with its confederates was illegal,” Acting CFPB Director David Uejio said in a Tuesday press release. “The CFPB will not tolerate companies that purport to represent consumers, but instead abuse their trust in a self-dealing scheme. This case provides a clear example of what Congress intended to prohibit when it created the CFPB and gave it authority to prevent abusive practices.”
SettleIt sold its debt-settlement services to 17,500 customers between 2016 and 2019, operating from the same building in Orange, Calif., as CashCall, LoanMe and RedoLending, the CFPB's complaint said.
Steve Klopstock, SettleIt's president and CEO, did not immediately respond to a request for comment. Klopstock is also vice president of loan servicing at CashCall, according to his LinkedIn profile.
The CFPB alleged that SettleIt treated consumers with debts to CashCall and LoanMe differently. The company allegedly marketed loans from CashCall and LoanMe and refinanced debt-laden consumers into new loans from both companies that included undisclosed fees. SettleIt also required consumers to authorize the company to resolve their debts without a consumer's express consent, the bureau claimed.
The agency alleged that SettleIt favored repayment of debts to CashCall and LoanMe over other, unaffiliated lenders, and its employees gave contact information for consumers who were behind on their payments to the two companies.
The CFPB cited SettleIt for engaging in abusive conduct in violation of the Consumer Financial Protection Act and for failing to clearly disclose costs and fees in violation of the Telemarketing Sales Rule.
The Dodd-Frank Act gave the CFPB the authority to punish firms for violating a longstanding federal prohibition on "unfair," "deceptive," or "abusive," acts or practices. Last month the CFPB
