Attorney General James, CFPB, and Multistate Coalition Protect Consumers from Debt-Relief Company that Took Over $100 Million in Illegal Fees

• by Urban CNY News
• January 19, 2024

StratFS Charged Exorbitant Fees and Misled Consumers about Debt Relief Services, Harming Already Vulnerable Consumers AG James and Coalition Win Court Order to Immediately Stop the Illegal Scheme New York – New York Attorney General Letitia James, the Consumer Financial Protection Bureau (CFPB), and a multistate coalition of six attorneys general sued StratFS LLC (StratFS), formerly known as Strategic Financial Solutions, LLC and a web of related shell companies for running an illegal debt-relief enterprise and defrauding consumers. Also named in the suit are the scheme’s key operators, Ryan Sasson, CEO of StratFS, and Jason Blust, who controlled the purported law firms alleged to have been involved in the scheme. The day after filing suit, Attorney General James, CFPB, and the coalition won a temporary restraining order (TRO) immediately stopping the fraudulent scheme. StratFS tricks consumers into paying exorbitant fees by claiming that the company’s network of law firms will negotiate down their debts, but most work is done by non-attorneys. Since 2016, StratFS has swindled thousands of financially vulnerable consumers out of more than $100 million. StratFS is based in New York, with offices in Buffalo and New York City, but provides its so-called services to consumers nationwide. With this lawsuit, Attorney General James, CFPB, and the coalition are seeking to stop StratFS from illegally operating and are asking the court to order damages, penalties, and restitution for impacted consumers.  “People can fall into debt, but New Yorkers — and all Americans — should not face even greater financial hardship when they attempt to seek help,” said Attorney General James. “StratFS, Sasson, and Blust preyed on hardworking consumers and charged illegal fees to unjustly enrich themselves and their business. Let this lawsuit serve as a warning to all who would follow in their footsteps: we can and will use the full force of the law to stop predatory schemes and protect consumers. I want to thank CFPB and my fellow attorneys general for their continued partnership in protecting hardworking Americans.” “The operators of this scheme established a network of shell companies and law firms to hide their illegal activities from law enforcement,” said CFPB Director Rohit Chopra. “The CFPB and state attorneys general are seeking to shut down this outfit’s illegal activity.” The complaint alleges that StratFS runs a scheme that targets financially vulnerable consumers and their families with misleading advertisements that trick them into believing they qualify for loans to pay down their debts. When consumers call the advertised number seeking help, StratFS employees typically instead tell consumers that they do not qualify for the advertised loan. The employees then persuade consumers to enroll in the company’s debt-relief services with the promise that its network of purported law firms will negotiate lower debt amounts. StratFS instructs consumers to stop paying their creditors, which can lead to creditors charging additional interest and fees and can have a significant negative impact on their credit score. Consumers are told to make payments into an escrow account. StratFS collects illegal advance fees before settling any debts, leaving many consumers worse off than when they entered the program. For one consumer who enrolled in debt-relief services, approximately 84 percent of the funds she paid into her StratFS account were extracted as fees, and only 16 percent of the funds were paid to creditors to relieve her debt. Another consumer paid StratFS more than $7,000 before a payment was finally made to a creditor. Ultimately, only 6.5 percent of the funds she put into her StratFS account went to paying off debt. Attorney General James, CFPB, and the coalition allege that StratFS violated the Telemarketing Sales Rule. In addition, Attorney General James alleges that StratFS engaged in fraudulent and deceptive business practices in violation of New York Executive Law § 63(12) and New York General Business Law § 349. Specifically, StratFS harms vulnerable consumers by:  Attorney General James, CFPB, and the coalition filed the complaint and requested a TRO and preliminary injunction in the U.S. District Court for the Western District of New York on January 10, 2024. On January 11, 2024, the court granted the request for a TRO, ordered a freeze of StratFS’ assets, and appointed a temporary receiver.  Joining Attorney General James and CFPB in this action are the attorneys general of Colorado, Delaware, Illinois, Minnesota, North Carolina, and Wisconsin. Any consumer who feels that they have been a victim of fraud is encouraged to file an online compliant with OAG.