Yesterday the Consumer Financial Protection Bureau (CFPB) issued a press release announcing they are taking enforcement action against four credit repair companies and three individuals for misleading consumers and charging illegal fees. A copy of the press release can be found here

The CFPB alleges that the companies not only charged illegal advance fees for credit repair services, but also misrepresented their ability to repair consumers’ credit scores. 

Per the press release:

“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.” 

The press release contains links to two separate complaints and two proposed stipulated final judgments.

The first complaint was filed in federal district court against Prime Credit, IMC Capital, Commercial Credit Consultants, Blake Johnson, and Eric Schlegel.

Commercial Credit Consultants is a Wyoming corporation with a principal place of business in Los Angeles, 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.  

The second complaint was filed in federal district court against Park View Law and Arthur Barens.

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.  

The press release also notes that 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. The release notes that litigation is ongoing in that matter.  

In the complaints, 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 CFPB also alleges that 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 further 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.

Per the proposed 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. In addition, there were monetary penalties included.

In the Commercial Credit Consultants matter the proposed judgment includes a civil money penalty against Defendants, jointly and severally, in the amount of $1,530,000. 

In the Park View Law matter, the proposed judgment includes equitable monetary relief in the form of disgorgement against Defendants, jointly and severally, in the amount of $500,000. The Defendants are to pay the monetary amount in two equal installments of $250,000.

The proposed judgments 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. 

insideARM Perspective

It is hard not to turn on the television or radio and not hear an ad for credit repair companies. Internet ads and email blasts are also very common. Some of the claims in the advertisements are outlandish, and, at least to this writer’s ear, border on outright lies. Still, there are very legitimate credit repair companies and very legitimate credit counseling organizations. Unfortunately, there are also still some companies that continue to operate in a manner similar to the companies involved in these enforcement actions.

Which of these companies is legitimate and which is operating outside the law? How can a consumer know for sure? The CFPB issued a consumer advisory in September 2016 to alert consumers about companies that engage in potentially misleading credit repair services. 

At a recent meeting of the Consumer Relations Consortium ( with representatives from both the CFPB and the Federal Trade Commission (FTC), the issue of credit repair companies was a featured topic. All parties recognized that legitimate credit repair and credit counseling organizations serve an important role. However, as one can tell from a review of the pleadings in these matters, unscrupulous companies are generating significant revenue and harming consumers in the process. In the words of CFPB Director Cordray, these companies “mislead them (consumers) to turn a dishonest profit.”

The bad actors need to be identified and eliminated. Regulatory bodies such as the CFPB and FTC will act IF and WHEN they become aware of the bad actors. The ARM industry should assist the regulators in identifying the bad actors.

These enforcement actions are a positive statement and hopefully a deterrent to others that operate in a similar fashion in this arena.

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