LOS ANGELES, June 27, 2017 /PRNewswire/ -- Three companies that formerly ran a Los Angeles-based credit-consulting service announced today that they and their two former principals reached a settlement with the Consumer Financial Protection Bureau, settling a CFPB civil investigation without admitting or denying the agency's allegations.
Commercial Credit Consultants, IMC Capital LLC and Prime Credit LLC and their former principals, Blake Johnson and Eric Schlegel, agreed to pay $1.53 million in settlement. Their business was launched in 2010 and grew steadily, serving tens of thousands of consumers across the United States until 2014, when it was sold to a private equity group. During its four years of operation, the business generated scores of testimonials from satisfied customers, whose improved credit standing gave them renewed access to home mortgages and other kinds of credit that made their lives better.
The companies issued the following statement:
"We decided, with great reluctance, to settle this investigation in order to avoid the further time and expense of a legal battle over an enterprise that we sold several years ago. The investigation already had dragged on for more than two years.
"When we decided to begin marketing our service to consumers, after several years of success with commercial customers, we wanted to follow not just the law, but industry best practices. To do so, we asked the California Department of Justice (the Office of the California Attorney General), which operates one of the world's largest and most respected consumer-protection units, to review our materials. During the years we operated the business, professionals with the California DOJ spent many hours redlining our consumer contracts and examining our operational policies in order to ensure our full compliance with the U.S. Credit Repair Organizations Act (CROA). At the time, the CFPB had not yet been created.
"During the course of the CFPB investigation, which was instigated not by a consumer complaint but by a former employee who had left us for a rival firm, we felt blindsided by the Bureau's reliance not on CROA but on the Telemarketing Sales Rule (TSR), a set of Federal Trade Commission regulations which to our knowledge had never before been used in this context. Under both CROA and TSR, credit-consulting firms are required to bill in arrears – that is, after services are performed. The key difference is that while CROA allows firms to send out bills after services are performed, the TSR bars firms from even beginning to seek compensation until at least six months after all work is completed. Such an interpretation conflicts not just with best practice but, as far as we know, all practice in the credit-repair industry. The timing of our billing – not the appropriateness – was the thrust of CFPB's objection.
"We are proud of the work we did to help consumers. For us, the credit-repair business was a sideline, which we exited when we sold it three years ago. We have no intention of returning, but we believe in the industry and we urge Congress and the President to examine the Bureau's enforcement strategies with an eye towards safeguarding consumers without choking off access to a service that betters the lives of working Americans."
Source: Commercial Credit Consultants
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SOURCE Commercial Credit Consultants