Since 2013, Credit Repair Cloud has sold software and products to credit repair businesses.
But according to the Consumer Financial Protection Bureau (CFPB), the company and its CEO also helped those companies charge illegal advance fees to consumers.
The CFPB on Thursday (Aug. 8) filed an order to resolve its lawsuit against Credit Repair Cloud and CEO Daniel A. Rosen, seeking a $2 million civil penalty against Rosen and a $1 million civil penalty against his company.
In addition, the order would also require the company and Rosen to take measures to ensure credit repair companies that Credit Repair Cloud cease charging consumers illegal advance fees, the agency said in a news release.
“Credit Repair Cloud and its CEO Daniel Rosen enabled credit repair companies that harvested illegal fees from struggling consumers,” said CFPB Director Rohit Chopra. “We will continue our work to hold individual executives accountable when they violate federal law.”
PYMNTS has contacted Credit Report Cloud for comment but has not yet gotten a reply.
According to the release, the CFPB alleges the company and Rosen provided “substantial assistance” to credit repair companies that use telemarketing to reach consumers and charge illegal advance fees by providing users with a system that generated and tracked disputes and integrated a billing system, and offered training, marketing tools and model websites.
The CFPB also alleges that Rosen was individually liable for his company Repair Cloud’s violations because he oversaw Credit Repair Cloud, he took part in its acts, and he knew “or recklessly disregarded” that they were taking place.
“Rosen’s acts of substantial assistance included, among other things, training credit repair companies on the Credit Repair Cloud’s system, providing sample scripts, and offering advice on how and when to collect fees from consumers,” the CFPB said.
If approved by the court, the $3 million settlement would nonetheless be dwarfed by the $2.7 billion settlement the CFPB reached with credit repair firms last year.
Also this week, the CFPB said it was cracking down on predatory lending in the solar panel industry after an investigation found some residential solar lenders are — among other things — misleading homeowners about the terms and costs of their loans and misrepresenting the energy savings the solar panels will deliver.
“With sweltering heat across America this summer, many families are installing solar panels to save on energy costs to cool their home,” Chopra said. “The CFPB is closely scrutinizing solar lenders to make sure that Americans don’t get burned.”
