WASHINGTON—The Consumer Financial Protection Bureau has filed a lawsuit in federal district court accusing a California-based software company and its owner for providing assistance to illegal credit-repair businesses.
The CFPB alleges that Credit Repair Cloud and CEO Daniel Rosen have 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 CFPB’s lawsuit seeks relief for harmed consumers from the defendants, disgorgement of their unjust gains, an injunction to stop their illegal conduct, and civil penalties.
“Credit Repair Cloud and Rosen have been breaking the law,” said Acting CFPB Director David Uejio. “They are actively assisting credit-repair businesses in violating federal consumer protection laws. They facilitated and encouraged credit-repair businesses to charge illegal advance fees, causing broader consumer harm in the marketplace. The CFPB will not tolerate companies facilitating and profiting from other companies’ violations of federal consumer protection laws.”
Credit Repair Cloud is a California-based corporation founded by Rosen. Since 2013, Credit Repair Cloud has sold software and other tools to help others start and operate credit-repair businesses.
The Allegations
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. Specifically, the CFPB alleges 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.
The CFPB said it is seeking monetary relief for consumers, disgorgement of unjust gains, injunctive relief, and a civil money penalty.