On December 14, 2022, the Colorado Attorney General (AG) announced that it entered into a consent order with a California-based debt management company and its sister lending company, resolving the AG’s examination findings that those companies violated Colorado’s Uniform Consumer Credit Code, C.R.S. § 5-1-101, et seq. (“UCCC”) and Debt Management Services Act, C.R.S. § 5-19-201 et seq. (“DMSA”).
In Colorado, it is unlawful for a company that provides debt management services to also lend money or provide credit to the same consumer. Here, a California-based debt management company formed a sister lending company, which was licensed to operate in Colorado. Both companies operated their businesses in Colorado and serviced the same consumers, which the AG purports was unlawful because the companies had a common owner. Additionally, the AG’s examination found that some consumers’ agreements were allegedly unsigned by the debt management company in violation of Colorado law.
Under the consent order, neither company can enroll new Colorado consumers for the next two years and the companies are required to issue $200,000 in refunds. Sixty percent of the $200,000 will go to 24 consumers who were subject to cross-selling, and the remaining forty percent will go to the 238 consumers who had unsigned agreements from the debt management company.
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