Candy Kern-Fuller, Howard Sutter III, and Upstate Law Group LLC
On February 20, 2020, the Consumer Financial Protection Bureau (Bureau), the South Carolina Department of Consumer Affairs (South Carolina), and Arkansas Attorney General Leslie Rutledge (Arkansas) filed a lawsuit in federal district court in the District of South Carolina against Candy Kern-Fuller, Howard Sutter III, and Upstate Law Group LLC. The complaint alleged that the defendants worked with a series of companies that brokered contracts offering high-interest credit to consumers, primarily disabled veterans, and violated the Consumer Financial Protection Act’s prohibition against deceptive acts or practices and against providing substantial assistance to deceptive and unfair acts or practices of others.
The action builds on a number of recent Bureau actions against other entities that used similar contracts and similar marketing tactics in offering high-interest credit to veterans. In January 2019, the Bureau settled with Mark Corbett. In August 2019, in partnership with Arkansas, the Bureau settled with Andrew Gamber; Voyager Financial Group, LLC; BAIC, Inc.; and SoBell Corp. In October 2019, in partnership with South Carolina, the Bureau filed a lawsuit against Katharine Snyder and her companies; Performance Arbitrage Company, Inc., and Life Funding Options, Inc. Corbett worked with both Gamber and Snyder, and their respective companies, to broker contracts offering high-interest credit. In each of these actions, the Bureau alleged that these contracts violate laws that prohibit these transactions and render them void, contrary to the representations made by Corbett, Gamber, Snyder, and their companies that the transactions were valid and enforceable. In these actions, the Bureau also alleged that the companies misrepresented to consumers that the product is a sale of payments and not a high-interest credit offer and failed to inform consumers of the products’ interest rates.
In this more recent action, the Bureau, South Carolina, and Arkansas alleged that the defendants assisted Gamber, Snyder, and their companies. The complaint specifically alleged that the defendants provided substantial assistance to the companies’ deceptive and unfair acts or practices by: developing a pre-approval or risk-assessment process for the contracts and conducting underwriting; approving or denying consumers’ applications to enter into the transactions; directing and administering the execution of the contracts; serving as the payment processor for the initial lump-sum payment and fees; and continuing to serve as the transactions’ payment processor. In addition, the complaint alleged that the defendants provided substantial assistance to deceptive misrepresentations by Gamber’s and Snyder’s companies to consumers that consumers may be subject to criminal prosecution if they breached their contacts when, in fact, the consumers could not be criminally prosecuted for breaching their contracts. The complaint also alleged that the defendants committed deceptive acts or practices by collecting on the contracts brokered by the companies, including by filing suit when consumers failed to make payments, and representing, expressly or impliedly, that consumers are legally obligated to make payments in accordance with the terms of their contracts when, in fact, the contracts are void from inception and consumers are not obligated to make payments.
On January 21, 2021, the court entered a stipulated final judgment and order imposing a judgment for equitable monetary relief against the defendants in the amount of $725,000 for consumer redress. It also permanently bans the defendants, among other things, from brokering sales or assignments of pensions and disability benefits and from collecting on any of these contracts.