By Julian Hattem - 05/30/13 06:48 PM EDT
Consumers paid the company to renegotiate or settle their debt. It collected an up-front enrollment fee as well as monthly payments.
However, the CFPB claims that about 89 percent of people who signed up never had their debt lowered or changed in any way by the company.
American Debt Settlement Solutions Inc. also made pledges to consumers it did not keep, including claims about the timeline of debt settlement and the amounts of debt it would be able to reduce. Lastly, it offered its services to consumers it knew would not be able to pay the company's fees.
All those actions, the CFPB claims, took advantage of vulnerable consumers.
In its complaint, the CFPB asserts that the company engaged in "deceptive acts or practices in telemarketing."
The Dodd-Frank financial reform law that created the CFPB allows it to enforce laws to target predatory firms.
A note on the company's website claims it is "is winding down operations and is no longer able to service its clients."