The Consumer Financial Protection Bureau filed a lawsuit accusing a California software company and its owner of providing assistance to illegal credit-repair businesses.
Credit Repair Cloud and its CEO Daniel Rosen allegedly violated the Telemarketing Sales Rule and the Consumer Financial Protection Act of 2010 by providing substantial assistance or support to credit-repair businesses that use telemarketing and charge unlawful advance fees to consumers, the CFPB said.
The CFPB’s complaint alleges that Rosen and Credit Repair Cloud provide “substantial assistance” to credit-repair companies that use telemarketing to reach consumers and charge unlawful advance fees. Since 2013, Credit Repair Cloud has sold software and other tools to help others start and operate credit-repair businesses.
Credit-repair companies may not request or receive fees from a consumer until they have provided a credit report that shows promised results and that was issued more than six months after such results were achieved. The CFPB alleges that Rosen and Credit Repair Cloud have encouraged the credit-repair businesses that use their services to charge unlawful advance fees. The pair “knew or consciously avoided knowing” their customers were charging advance fees in violation of the TSR.
“Credit Repair Cloud and Rosen have been breaking the law,” said Acting CFPB Director David Uejio. “They are actively assisting credit-repair businesses in violating federal consumer protection laws. They facilitated and encouraged credit-repair businesses to charge illegal advance fees, causing broader consumer harm in the marketplace. The CFPB will not tolerate companies facilitating and profiting from other companies’ violations of federal consumer protection laws.”