At the same time as
issuing a warning about credit repair scams, the Consumer Financial Protection
Bureau has sued a credit repair company for misleading customers and charging
illegal fees.
The CFPB’s consumer advisory outlines consumers’ rights and warns them of potentially harmful
practices to look out for. As part of the consumer advisory, the bureau is
highlighting that consumers do not have to pay anyone to help correct
inaccurate information in their credit reports.
Prime Marketing
Holdings, LLC allegedly charged consumers a series of illegal advance fees as
well as misrepresented the cost and effectiveness of its services. As part of
the lawsuit in a California federal district court, the CFPB is seeking
monetary relief, injunctive relief, and penalties.
The CFPB alleges that
Prime Marketing Holdings lured consumers with misleading, unsubstantiated
claims that it could remove virtually any negative information from their
credit reports and could boost credit scores by significant amounts. The
company attracted customers through its website and sales calls, at times
targeting consumers who had recently sought to obtain a mortgage, loan,
refinancing, or other extension of credit. According to the complaint,
PMH charged certain consumers a monthly fee of up to $89.99 for the services,
or "a separate set-up fee of several hundred dollars
for the first two months, and then charged the monthly fee in later
months."
Deceptive acts and
practices. The bureau’s complaint alleges that Prime Marketing Holdings
violated the violated Dodd-Frank Act’s prohibition on deceptive acts and
practices in the marketing and promotion of its services. Violations of the
Telemarketing Sales Rule are also charged. Specifically, the complaint
alleges that the defendant:
- charged illegal advance fees which are barred under federal law;
- misled consumers about the costs of their services;
- failed to disclose limits on “money-back guarantee;” and
- misled consumers about the benefits of the company’s services.
The CFPB asserts that the credit repair
offered to consumers by PMH was a consumer financial product or service covered
by the Consumer Financial Protection Act.
For more information about actions against credit repair companies, subscribe to the Banking and Finance Law Daily.
