On May 26, 2022, the North Carolina Attorney General (NC AG) announced that it obtained a default judgment against a California-based debt settlement business, and its proprietor. The lawsuit, filed on June 25, 2021 in the North Carolina Superior Court for Wake County, alleged that the entity violated North Carolina's Debt Adjusting Act, N.C. Gen. Stat. ?§ 14-423, et seq., and North Carolina's Unfair and Deceptive Trade Practices Act, N.C. Gen. Stat. § 75-1.1. Specifically, the NC AG alleged that the defendants unlawfully collected up advance ?fees for its services and misleadingly represented that it would provide refunds to consumers in the event that it could not obtain loan modifications or prevent foreclosures. The NC AG further alleged that defendants falsely represented that their business would work as an intermediary to help reduce consumers' mortgage loan payments, and to assist consumers in avoiding foreclosure or obtaining a forbearance. According to the NC AG, the defendants never provided these services, and never refunded consumers their upfront fees.
In the entry of default, the court permanently enjoined the defendants from engaging in or advertising debt settlement or debt relief services, and from performing mortgage loan modifications and foreclosure assistance. The court also ordered the defendants to pay $5,046 in restitution to North Carolina consumers and $5,000 in civil penalties for each alleged violation of the Unfair and Deceptive Trade Practices Act (totaling $15,000).
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