Software firm faces lawsuit for allegedly helping credit repair companies charge illegal fees

A California-based software company that helps credit repair businesses allegedly charge illegal fees now faces a lawsuit from the federal consumer financial protection agency for harming consumers and violating federal telemarketing sales rules, the agency said Monday.

The Consumer Financial Protection Bureau (CFPB) said it filed the lawsuit against the firm Credit Repair Cloud, and CEO Daniel Rosen, accusing it of aiding illegal credit-repair businesses. The bureau said the firm and its executive have allegedly violated the Telemarketing Sales Rule (TSR) and the Consumer Financial Protection Act of 2010 (CFPA) by providing substantial assistance or support to credit-repair businesses that use telemarketing and charge unlawful advance fees to consumers. The bureau also said the two allegedly violated the CFPB’s telemarketing sales rule (TSR).

The CFPB said its lawsuit seeks relief for harmed consumers from the defendants, disgorgement of their unjust gains, an injunction to stop their illegal conduct, and civil penalties.

According to the bureau, since 2013, Credit Repair Cloud sold software and other tools to help others start and operate credit-repair businesses. The bureau alleged that such companies that use telemarketing are covered by the TSR; thus, such firms may not request or receive fees from a consumer until the company has provided that consumer with a credit report that shows the promised results and that was issued more than six months after such results were achieved.

“The CFPB’s complaint alleges that Rosen and Credit Repair Cloud are providing substantial assistance to credit-repair companies that use telemarketing to reach consumers and charge unlawful advance fees under the TSR,” CFPB said.

Specifically, the agency charged that Rosen and Credit Repair Cloud “have encouraged the credit-repair businesses that use their services – including trainings, materials, and software – to charge unlawful advance fees and Rosen and Credit Repair Cloud knew or consciously avoided knowing that these customers were charging advance fees in violation of the TSR.”

CFPB Sues Software Company That Helps Credit-Repair Businesses Charge Illegal Fees