Four "credit repair" firms are facing fines and oher penalties for allegedly misleading consumers, charging illegal fees and misrepresenting their ability to repair credit scores.
“Today, the Bureau is taking action against companies that charged illegal fees and misled consumers about their ability to fix their credit,” said Consumer Financial Protection Bureau (CFPB) Director Richard Cordray. “We will remain vigilant about protecting consumers from companies that mislead them to turn a dishonest profit.”
Under a proposed final judgment, Prime Credit, LLC, IMC Capital, LLC, Commercial Credit Consultants, Blake Johnson, and Eric Schlegel would pay a civil money penalty of more than $1.5 million. Under a second proposed final judgment, Park View Law, known formerly as Prime Law Experts, Inc., and its owner Arthur Barens would pay $500,000 in relinquished funds to the U.S. Treasury.
The CFPB alleges that the defendants made misleading, unsubstantiated claims that they could remove virtually any negative information from consumers’ credit reports and could boost consumers’ credit scores by significant amounts. The companies attracted thousands of customers through sales calls and their websites, at times targeting consumers who had recently sought to obtain a mortgage, loan, refinancing, or other extension of credit.
Violated Dodd-Frank Act
The CFPB alleges that the companies charged these consumers millions of dollars in illegal advance fees for their services. The Bureau alleges that these practices violated the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Telemarketing Sales Rule. Specifically, the CFPB alleges that the defendants:
- Charged illegal advance fees: Federal law bars telemarketers and certain companies from requesting or collecting fees for credit repair services until certain conditions are met about the delivery of those services.
- Failed to disclose limits on “money-back guarantees”: The companies offered a money-back guarantee for certain services. However, they failed to disclose that the guarantee had significant limits.
- Misled consumers about the benefits of their services: The companies misrepresented that their credit repair services would result in the removal of negative entries on consumers’ credit reports.