The Consumer Financial Protection Bureau and the Attorney General of Massachusetts on Friday announced a joint enforcement action against a credit repair organization for collecting $23 million in fees by deceptively misrepresenting its effectiveness at improving the credit scores for individuals who signed up for its services.
A copy of the complaint, filed in the District Court for the District of Massachusetts, can be accessed by clicking here.
Nearly 40,000 individuals were duped into signing up for the services offered by the defendants, Commonwealth Equity Group, LLC, which does business as Key Credit Repair, and Nikitas Tsoukales (also known as Nikitas Tsoukalis), Key Credit Repair’s president and owner, between 2016 and 2019, according to the CFPB. The defendants are accused of violating the Consumer Financial Protection Act by allegedly engaging in deceptive acts or practices and the Telemarketing Sales Rule by allegedly engaging in deceptive telemarketing acts or practices. Specifically, the defendants collected fees, including as much as $160 upon enrolling in its programs and then $160 per month thereafter, before achieving any results related to repairing the individual’s credit.
The defendants allegedly claimed to help individuals improve their credit scores by 90 points in 90 days and promised to repair an “unlimited” number of negative items from their credit reports.
While purporting to have more than 60 credit repair experts, the defendant actually only employed a handful of employees at its offices in Boston, and only some of them interacted with consumers. Most of the interactions with consumers were conducted by telemarketers working in Central America who were paid “almost entirely” in commissions based on the number of individuals that they enrolled, according to the complaint.
