Judge Blocks Debt Settlement Company From Resuming Operations

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The federal government is likely to win in its lawsuit against Strategic Financial Solutions, a debt negotiation company covered in a Times investigation last month, according to a magistrate judge’s preliminary injunction granted this week that keeps it from operating. For years, Strategic Financial Solutions collected fees from thousands of low-income clients who enrolled with the company to negotiate down their debts. In January, the Consumer Financial Protection Bureau — along with the attorneys general of New York, Colorado, Delaware, Illinois, Minnesota, North Carolina and Wisconsin — sued Strategic and its operators, including its chief executive, Ryan Sasson, on civil fraud charges. In interviews with former employees and former customers of Strategic, many described the company as predatory and said its services often left people financially worse off. The company works with a nationwide network of accomplice law firms. Customers think they’re paying those firms to represent them in the high-risk process of debt settlement, but instead they are often funneled toward call-center workers with no legal training, and are sometimes unrepresented in legal proceedings. This week, a federal judge in the Western District of New York said that the debt-relief program run by Strategic and its associated law firms does not provide “appreciable economic benefit” to its customers, and that many who sign up for the “program are negatively impacted.”