Consumer watchdog sues debt relief company for illegal fees

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According to the agency, Morgan Drexen disguised the upfront fees it charged by masking them as charges connected to a contract for settling bankruptcy. The company performed little actual bankruptcy work, however.

That’s a violation of rules barring deceptive practices and prohibitions on fees for debt-relief services until the accounts are settled.

More than 22,000 people have enrolled in the company's program, according to the CFPB, paying millions of dollars in upfront fees.

Morgan Drexen’s founder and president, Walter Ledda, was also a target of the suit.

This is not the first legal interaction between the agency and the debt company.

Morgan Drexen actually sued the CFPB in July, claiming that the agency “doesn’t have any restraint” or checks to its power.

The company claimed at the time that, in the course of its investigation, the CFPB tried to obtain information that should have been protected by attorneys-client privileges, including names and income information about people who used its services.