CFPB TAKES ACTION AGAINST CREDIT REPAIR COMPANIES FOR CHARGING ILLEGAL FEES AND MISLEADING CONSUMERS
Companies and Individuals to Pay More Than $2 Million in Penalties and Relinquished Funds

credit repair scam

6/27/17 – The Consumer Financial Protection Bureau (CFPB) filed two complaints and proposed final judgments in federal court against four California-based credit repair companies and three individuals for misleading consumers and charging illegal fees. 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, 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 in relinquished funds 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,” said CFPB Director Richard Cordray. “We will remain vigilant about protecting consumers from companies that mislead them to turn a dishonest profit.”

credit repair scamCommercial 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 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 CFPB alleges that the companies charged these consumers millions of dollars in illegal advance fees for their services. The Bureau alleges that these practices violated the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Telemarketing Sales Rule. Specifically, the CFPB alleges that the defendants:

  • credit repair scamCharged illegal advance fees: Federal law bars telemarketers and certain companies from requesting or collecting fees for credit repair services until certain 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. Specifically, 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 certain 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, or likely 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 contained 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. They have been filed with the U.S. District Court for the Central District of California, and they are only effective if approved by the presiding judge.

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.

The Bureau also issued a consumer advisory in September 2016 to alert consumers about companies that engage in potentially misleading credit repair services.

A copy of the complaint filed in federal district court against Prime Credit, IMC Capital, Commercial Credit Consultants, Blake Johnson, and Eric Schlegel

A copy of the proposed final judgement filed in federal district court against Prime Credit, IMC Capital, Commercial Credit Consultants, Blake Johnson, and Eric Schlegel

A copy of the complaint filed in federal district court against Park View Law and Arthur Barens

A copy of the proposed final judgement filed in federal district court against Park View Law and Arthur Barens

MUSINGS FROM DIANE:

credit repair scamPeople are very trusting.  They believe the lies of these credit “repair” companies because they believe there is no other option.  Are there alternatives – of course!!  I refer folks to the National Foundation of Consumer Credit Counselors, a true non-profit that has been around for more than 40 years.  Their business is to help people pay off credit cards over a period of time, at (perhaps) a reduced interest.  There is also bankruptcy, which I know that sounds scary, but it is a great idea to educate yourself about both of the these options.  NEVER use a credit repair company.
1005 words|5.2 min read|Categories: Bankruptcy Articles & Resources, Collection companies & Debt buyers, Credit Report, Debt Relief Agencies, scams|By |Published On: July 5th, 2019|Last Updated: July 14th, 2022|

Share this article

Diane is a well respected Arizona bankruptcy and foreclosure attorney. As a retired law professor, she believes in offering everyone, not just her clients, advice about bankruptcy and Arizona foreclosure laws. Diane is also a mentor to hundreds of Arizona attorneys.

*Important Note from Diane: Everything on this web site is offered for educational purposes only and not intended to provide legal advice, nor create an attorney client relationship between you, me, or the author of any article. Information in this web site should not be used as a substitute for competent legal advice from an attorney familiar with your personal circumstances and licensed to practice law in your state. Make sure to check out their reviews.*

Law Office of D.L. Drain, P.A., Arizona Bankruptcy Lawyer - Google Reviews
Law Office of D.L. Drain, P.A., Arizona Bankruptcy Lawyer - Yelp Reviews
Law Office of D.L. Drain, P.A., Arizona Bankruptcy Lawyer - Avvo Reviews
Avvo - Rate your Lawyer. Get Free Legal Advice.
Law Office of D.L. Drain, P.A., Arizona Bankruptcy Lawyer - Alignable Reviews
Law Office of D.L. Drain, P.A., Arizona Bankruptcy Lawyer - Better Business Bureau
Law Office of D.L. Drain, P.A., Arizona Bankruptcy Lawyer - Google Reviews
Law Office of D.L. Drain, P.A., Arizona Bankruptcy Lawyer - Yelp Reviews
Law Office of D.L. Drain, P.A., Arizona Bankruptcy Lawyer - Avvo Reviews
Avvo - Rate your Lawyer. Get Free Legal Advice.
Law Office of D.L. Drain, P.A., Arizona Bankruptcy Lawyer - Alignable Reviews
Law Office of D.L. Drain, P.A., Arizona Bankruptcy Lawyer - Better Business Bureau

In Case You Missed It

  • In today's consumer landscape, credit cards are the normal tools for managing finances and making purchases. However, having credit card debt can lead to financial stress and vulnerability to predatory schemes. Recognizing the importance [...]

  • The Arizona Supreme Court decided those living in motorized homes (such as motor homes and RVs) cannot protect their homes. The Arizona Supreme Court's decision In re Drummond, 23-0009 (Sup. Ct. Arizona, 3/7/24) bans [...]

  • All Attorneys Must Return Client Calls, Even Flat-Fee Attorneys In a recent bankruptcy case, In re: Dennis Molnar, 19-bk-09525, 2024 WL 190919 (Jan. 17, 2024 N.D, Ill.), a court highlighted a [...]

  • Published On: January 3, 2024

    Understanding Why Some Bankruptcy Cases Get Dismissed or Discharge Revoked for Bad Faith Bankruptcy is meant to offer individuals and businesses a chance at a fresh start by alleviating financial burdens. However, [...]