Bureau seeks redress of $18 million against mortgage lender Monster Loans for deceptive practices, illegal fees

A judgment for redress of $18 million, and fines totaling $450,000, have been proposed for a California mortgage lender to pay for unlawfully obtaining consumer reports that led to deceptive marketing of services and charging of illegal fees, the federal consumer financial protection agency said Thursday.

The Consumer Financial Protection Bureau (CFPB) said in a release that it had filed a proposed stipulated final judgment to resolve its allegations in its lawsuit against California mortgage lender Chou Team Realty, LLC, which does business as Monster Loans (Monster Loans), and several individuals and related companies, including Thomas Chou and Sean Cowell.

The agency alleged in the proposal that Chou and Cowell “were among the leaders of a scheme to use Monster Loans’ account with a major credit bureau to unlawfully obtain consumer reports for their associated student loan debt-relief companies, which in turn used the consumer reports to deceptively market their services nationwide and then charged consumers illegal fees.”

The agency said the proposed settlement, if approved by the court, would impose an $18 million redress judgment against Monster Loans, ban Monster Loans, Chou, and Cowell from the debt-relief industry, and impose a total $450,001 civil money penalty against them.

The CFPB alleges that between 2015 and 2017, Monster Loans violated the Fair Credit Reporting Act (FCRA) by obtaining consumer-report information for more than 7 million consumers with student loan debt from a major credit bureau based on the false representation that the company would use the information to offer mortgage loans to consumers.

“Monster Loans allegedly provided the reports to several associated student loan debt-relief companies to use in marketing their services,” CFPB said.

The agency added that it also alleged that in 2017 Monster Loans helped create a sham entity called Lend Tech Loans to perpetuate the scheme to unlawfully obtain consumer reports: “Lend Tech Loans purported to be a mortgage brokerage, but in fact has only ever been used to unlawfully obtain consumer report information,” the agency said.

As alleged in the complaint, because of Monster Loans’ assistance, Lend Tech Loans was able to wrongfully obtain consumer reports for over 12 million additional consumers between 2017 and 2019.  The Bureau further alleged that, with Monster Loans’ assistance, the student loan debt-relief companies violated the Consumer Financial Protection Act (CFPA) and the Telemarketing Sales Rule (TSR) by making several deceptive representations about the companies’ services and violated the TSR by unlawfully collecting advance fees for debt relief services.

Consumer Financial Protection Bureau Settles with Monster Loans, Thomas Chou, Sean Cowell, and Related Companies