Washington, D.C. – On June 27, two complaints were filed against four California-based credit repair companies and three individuals for beguiling consumers about their services and charging unlawful fees.
The four companies – Prime Credit LLC, IMC Capital LLC, Commercial Credit Consultants and Park View Law – reached a legal settlement of $2 million penalty (and other legal repercussions) with CFPB.
CFPB’s director Cordray said, “the Bureau is taking action against companies that charged illegal fees and misled consumers about their ability to fix their credit … We will remain vigilant about protecting consumers from companies that mislead them to turn a dishonest profit.”
Companies Violated Federal Law
According to CFPB, the companies and some of their executives charged credit repair seekers unlawful fees, and beguiled customers about their services in their advertisements. The companies made unwarranted claims about removing any sort of damaging information from credit reports. Moreover, they claimed that they can significantly increase their credit scores.
The CFPB maintains that the companies charged millions of dollars in unlawful fees for the services they provided. Their unscrupulous practices violated the Consumer Financial Protection Act, the Federal Trade Commission’s Telemarketing Sales Rule, and the Dodd-Frank Wall Street Reform.
Under federal law, telemarketers and specific entities, such as credit repair companies, must meet certain conditions before requesting or collecting fees for their services. The companies charged clients with initial consultations and unlawful fees that totaled $89.99 per month. Furthermore, the companies failed to disclose certain information that made their claim on “money-back guarantees” illegal.
The companies beguiled clients about their credit repair services. They claimed that negative entries will be removed from the consumers’ credit reports, and that they would substantially increase the consumers’ credit scores.
The companies paid $2 million in penalties for illegal practices. Moreover, in the proposed final judgements from federal courts, the companies will be forbidden from conducting credit repair services for five years. They are also permanently forbidden from violating the FTC’s Telemarketing Sales Rule or the Dodd-Frank Wall Street Reform.