The Consumer Financial Protection 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, 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 to the U.S. Treasury.
“Today, the bureau is taking action against companies that charged illegal fees and misled consumers about their ability to fix their credit,” Richard Cordray, director of the bureau, said Wednesday.
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 lawsuits filed with the proposed final judgments, the bureau 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.
The bureau alleges that the companies charged these consumers millions of dollars in illegal advance fees for their services. It also alleges that these practices violated federal law.
The bureau alleges that the defendants:
- Charged illegal advance fees: Federal law bars telemarketers and some companies from requesting or collecting fees for credit repair services until conditions are met about the delivery of those services. The companies charged a variety of fees for their services before demonstrating that the promised results had been achieved as required by law. The companies charged consumers fees for an initial consultation to review a consumer’s credit report. The company also charged set-up fees totaling hundreds of dollars and monthly fees that often equaled $89.99 per month.
- Failed to disclose limits on “money-back guarantees”: The companies offered a money-back guarantee for some services. However, they failed to disclose that the guarantee had significant limits, including that the consumer must pay for at least six months of the service to be eligible for the guarantee.
- 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. The companies also misrepresented to customers that their credit repair services would result in a substantial increase to consumers’ credit scores. The companies lacked a reasonable basis for making these claims.
In addition to paying the amounts listed in the proposed final judgments, all defendants would be prohibited from doing business within the credit repair industry for five years and permanently prohibited from violating the Dodd-Frank Act or the Telemarketing Sales Rule.
The final judgments have been filed in federal court, and they'll be effective when approved by a judge.
In September 2016, the bureau 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.