Home > News > Feds Shut Down Law Firm That Collected $67 Million in ‘Debt Relief’ Fees

Comments 0 Comments
Advertiser Disclosure


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:

Image: iStock

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team