AG HEALEY SECURES
$1 MILLION IN FIRST-OF-ITS-KIND RESOLUTION WITH DEBT SETTLEMENT COMPANY
Settlement with
Beverly-Based DMB Financial Requires Unprecedented Business Practice Changes
The consent judgment with DMB
Financial, LLC, and
its chief operating officer, Daniel Kwiatek, entered on Monday in Suffolk
Superior Court, 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’s business
practices were the epitome of unfair and deceptive – preying on low-income
consumers desperate for debt relief, charging them illegal fees, and leaving
them with more debt, damaged credit, and sued by debt collectors,” AG Healey.
“This settlement is first-of-its-kind against a debt settlement company in
Massachusetts and its terms will lay out a roadmap for addressing misconduct in
this industry going forward. We are pleased to secure the funds needed to give
money back to consumers who were harmed by DMB’s illegal operations.”
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
today’s 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.
Handling this case
are Assistant Attorneys General Yael Shavit and Mercy Cover of AG Healey’s
Consumer Protection Division and Paralegals Keren Yi and Breana Beaudreault.
