Four California-based credit repair companies and three individuals are the target of two complaints by the Consumer Financial Protection Bureau. The CFPB also filed two proposed final judgements.
The bureau alleges that the companies not only charged illegal advance fees for credit repair services, but also misrepresented their ability to repair consumers’ credit scores.
Under a proposed final judgment, the subjects of the first complaint – 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, the subjects of the other complaint – 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.
Commercial Credit Consultants is a Wyoming corporation with a principal place of business in Los Angeles, Calif., that has also operated under the name Accurise. It offered and sold credit repair services to consumers from the summer of 2009 until the summer of 2012. Prime Credit, also known as Prime Marketing, LLC and Prime Credit Consultants, is a Los Angeles-based company that offered similar credit repair services from the summer of 2012 through the fall of 2014. IMC Capital is a Los Angeles-based company that provided credit repair services in 2012. Johnson was the founder and majority owner of Commercial Credit Consultants, Prime Credit, and IMC Capital, while Schlegel was the president and a minority shareholder of Commercial Credit Consultants and Prime Credit.
Arthur Barens owned Prime Credit’s business partner, Park View Law, based in Los Angeles. From March 2013 through September 2014, Prime Credit marketed and sold credit repair services to consumers using Park View Law’s name, and provided credit repair services to consumers who entered into contracts with Park View Law. Park View Law continued to offer and provide credit repair services through a similar arrangement until as late as June 2015.
In complaints filed with the proposed final judgments, 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 CFPB alleges that the companies charged these consumers millions of dollars in illegal advance fees for their services.
Specifically, they violated the Dodd-Frank Act, the Consumer Protection Act and the Telemarketing Sales Rule by charging illegal advance fees, failing to disclose limits on ‘money-back guarantees’, and misleading consumers about the benefits of their services.
“Today, the Bureau is taking action against companies that charged illegal fees and misled consumers about their ability to fix their credit,” said CFPB Director Richard Cordray. “We will remain vigilant about protecting consumers from companies that mislead them to turn a dishonest profit.”
In addition to paying the amounts contained in the proposed final judgments, all defendants would be prohibited from doing business within the credit repair industry for five years.
In September 2016, the CFPB filed a lawsuit alleging similar violations of federal law against Prime Marketing Holdings, a credit repair company that partnered with Park View Law from September 2014 to June 2015. That litigation is ongoing.