A California Superior Court judge has granted the Office of the Attorney General’s request for a preliminary injunction against Sam and Houri Razjooyan, the operators of the debt-relief firm Prime Debt Solutions. According to the California Department of Justice, the court order mandates that the defendants hire a third-party monitor to oversee their business operations and prohibits them from collecting advance fees from consumers.
Court-Ordered Oversight for Prime Debt Solutions
The preliminary injunction follows a lawsuit filed by Attorney General Rob Bonta, which alleges that the defendants engaged in unlawful business practices that harmed vulnerable consumers. The court’s decision requires the Razjooyans to appoint a professional monitor who will review the company’s financial records and consumer communications. This oversight is intended to ensure compliance with state laws governing debt settlement services.
Under the terms of the injunction, Prime Debt Solutions is barred from charging or receiving upfront fees before a debt has been successfully settled. This practice is a central focus of California’s consumer protection statutes, which aim to prevent debt-relief companies from profiting before providing tangible results to the client.
Regulatory Focus on Debt Settlement Practices
The legal action highlights the ongoing scrutiny of the debt-relief industry by the California Attorney General’s Office. The lawsuit alleges that the defendants misled consumers regarding the nature of their services and the likelihood of successfully reducing their debt burdens.
State regulations, specifically those enforced under the California Financial Code, strictly regulate how debt settlement companies operate. These laws are designed to protect individuals struggling with financial distress from predatory practices that often exacerbate existing debt problems. By requiring a third-party monitor, the court aims to establish a layer of accountability that was previously absent from the company’s operations.
Compliance and Consumer Impact
For consumers who have engaged with Prime Debt Solutions, the injunction serves as a protective measure during the ongoing litigation. The court’s mandate includes:
- Prohibition of Advance Fees: The company cannot collect fees until a debt settlement agreement is reached and approved by the consumer.
- Third-Party Monitoring: An independent monitor must report on the company’s adherence to the injunction.
- Operational Transparency: The defendants must maintain clear records of all consumer transactions for court review.
The Attorney General’s office continues to investigate the full extent of the alleged harm. Consumers who believe they have been affected by unlawful debt-relief practices are encouraged to file a complaint through the official California Department of Justice consumer portal.
This preliminary injunction remains in effect while the underlying lawsuit proceeds through the judicial process. The court will determine the final outcome of the case following further discovery and arguments from both the state and the defense.