Business
4:08 am
Wed May 8, 2013

Debt Settlement Firm Accused Of Defrauding Thousands

Originally published on Thu May 9, 2013 9:43 am

Transcript

DAVID GREENE, HOST:

A New York-based debt settlement agency has been charged with fraud. Yesterday, the company's owner and three employees were arrested. Federal prosecutors say the company cheated already cash-strapped customers out of millions.

As NPR's Dan Bobkoff reports, this case is notable for another reason: it's the first criminal case based on work by the new Consumer Financial Protection Bureau - an agency created under the law known as the Dodd-Frank Act.

DAN BOBKOFF, BYLINE: A company called Mission Settlement Agency told consumers it could get rid of their debts. Instead, authorities say it just took their money. The complaint says Mission lied about its fees and results. And, in many cases, it took millions from consumers and never paid anything to their creditors. At least 1,200 people were harmed.

Richard Cordray heads the Consumer Financial Protection Bureau, which first uncovered the alleged fraud.

RICHARD CORDRAY: We find that in this, as in many markets, if you're trying to sell a product or service that has little or no value, the only way to do it successfully is by lying about it or hiding the truth from consumers who otherwise would not purchase it.

BOBKOFF: For the new and still-controversial CFPB, this is one way it's now doing business: actively investigating companies and referring what it considers criminal acts over to the Department of Justice. This case is the first to stem from the CFPB's work, and at a Tuesday press conference announcing the charges, Cordray suggested more cases like this are coming.

CORDRAY: We're signaling today that the federal prosecutors here and across the country are our partners. We will be looking for more occasions to coordinate and collaborate with them.

BOBKOFF: With this week's charges, the U.S. Attorney's Office is pursuing a criminal case, while the CFPB filed its own civil action.

Dan Bobkoff, NPR News, New York. Transcript provided by NPR, Copyright NPR.