CFPB Sues Credit Repair Cos. for Charging Illegal Fees
07/13/17 – The CFPB sued four California-based credit repair companies in federal court for allegedly misleading consumers and charging illegal fees.
The Consumer Financial Protection Bureau (CFPB) alleges that defendants charged illegal advance fees for credit repair services and also misrepresented their ability to repair consumers’ credit scores.
The Bureau alleges that the defendants violated the Dodd-Frank Act and the Telemarketing Sales Rule by making 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 also alleges that the companies charged their consumers millions of dollars in illegal advance fees for their services.
Specifically, the CFPB complains that the defendants:
- Charged illegal advance fees.
- Failed to disclose limits on “money-back guarantees.”
- Misled consumers about the benefits of their services.
Under a CFPB proposed final judgment, three of the companies would pay a civil money penalty of more than $1.5 million. Under a second CFPB proposed final judgment, the fourth company would pay $500,000.