Prime Marketing Holdings, LLC
Documents in this case
Case summary
The Consumer Financial Protection Bureau (CFPB) filed a
lawsuit against Prime Marketing Holdings, LLC for illegal credit repair
practices. The lawsuit alleged that the company charged illegal advance fees
and misled consumers about the cost and effectiveness of its services and the
nature of its money-back guarantee. Under the terms of the final
judgement, Prime Marketing Holdings, LLC is permanently banned from doing
business within the credit repair industry and has been ordered to pay a
$150,000 civil money penalty.
Complaint ()
PDF of this document (52 pages)
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SARAH PREIS, DC BAR # 997387 (PHV) (Email: [email protected]) (Phone: 202-435-9318) COLIN REARDON, NY Bar # 4945655 (PHV pending) (Email: [email protected]) (Phone: 202-435-9668) BENJAMIN CLARK, IL BAR # 6316861 (PHV) (Email: [email protected]) (Phone: 202-435-7871) Consumer Financial Protection Bureau 1700 G Street NW Washington, DC 20552 Fax: (202) 435-7329
KENT KAWAKAMI, CA Bar # 149803 – Local Counsel (Email: [email protected]) (Phone: 213-894-4858) United States Attorney’s Office Central District of California - Civil Division 300 North Los Angeles Street, Room 7516 Los Angeles, CA 90012 Fax: (213) 894-2380
Attorneys for Plaintiff Consumer Financial Protection Bureau
UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA
Consumer Financial Protection Bureau,
Plaintiff,
v.
Prime Marketing Holdings, L.L.C., (d.b.a. Park View Credit, National Credit Advisor, and Credit Experts) Defendant.
Case No. 2:16-cv-07111-BRO (JEM)
SECOND AMENDED COMPLAINT FOR PERMANENT INJUNCTION AND OTHER RELIEF
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Plaintiff, the Consumer Financial Protection Bureau (“Bureau”), alleges the following against Prime Marketing Holdings, L.L.C. (“PMH”). INTRODUCTION 1.
The Bureau brings this action under Sections 1031(a), 1036(a), and 1054(a) of the Consumer Financial Protection Act of 2010 (“CFPA”), 12 U.S.C. §§ 5531(a), 5536(a), 5564(a); and the Telemarketing and Consumer Fraud and Abuse Prevention Act (“Telemarketing Act”), 15 U.S.C. §§ 6101-6108, and its implementing regulation, the Telemarketing Sales Rule (“TSR”), 16 C.F.R. Part 310, in connection with Defendant’s offer and sale of credit repair services. 2.
Defendant engages in an ongoing, unlawful credit repair business that harms consumers nationwide by charging consumers unlawful advance fees and misrepresenting both the costs and the benefits of its services. JURISDICTION AND VENUE 3.
This Court has subject-matter jurisdiction over this action because it is “brought under Federal consumer financial law,” 12 U.S.C. § 5565(a)(1), presents a federal question, 28 U.S.C. § 1331, and is brought by an agency of the United States, 28 U.S.C. § 1345.
4.
Venue is proper in this District under 28 U.S.C. § 1391(b)(1) because Defendant resides in this District, 28 U.S.C. § 1391(b)(2), because a substantial part of the events or omissions giving rise to the claims herein occurred in this Case 2:16-cv-07111-BRO-JEM Document 54 Filed 02/10/17 Page 2 of 52 Page ID #:729
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District, and under 12 U.S.C. § 5564(f), because Defendant is located in and does business in this District.
PARTIES 5.
The Bureau is an independent agency of the United States. 12 U.S.C. § 5491. The Bureau is charged with enforcing Federal consumer financial laws. 12 U.S.C. §§ 5563, 5564. The Bureau has independent litigating authority, 12 U.S.C. § 5564(a)-(b), including the authority to enforce the TSR as it applies to persons subject to the CFPA, 15 U.S.C. § 6105(d). 6.
PMH is a Delaware company organized in 2014 that has a place of business at 15350 Sherman Way, #255, Van Nuys, CA. 7.
PMH purchased the assets of several credit repair companies on September 30, 2014.
8.
Beginning on or about October 1, 2014, PMH offered and provided credit repair services to consumers.
9.
Since that time, PMH has used several different names in offering, selling and providing credit repair services to consumers. 10.
On or about September 29, 2014, PMH entered into an agreement with Park View Law, Inc.
11.
Park View Law is a California company that was registered as a credit services organization (“CSO”) with the California Department of Justice. Case 2:16-cv-07111-BRO-JEM Document 54 Filed 02/10/17 Page 3 of 52 Page ID #:730
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12.
Park View Law has also done business as Park View Legal (collectively referred to herein as “PVL”). 13.
A California attorney was the sole owner, officer, and employee of PVL.
14.
Pursuant to its agreement with PVL, PMH handled marketing and performed all credit repair services for consumers who entered into contracts with PVL.
15.
This agreement enabled PMH to offer credit repair services using PVL’s name.
16.
PMH began marketing its services on the website www.parkviewcredit.com as early as October 2014, even though it continued to do business as Park View Legal after that time. 17.
As early as September 2015, PMH began doing business in the name Park View Credit.
18.
As early as November 2015, PMH began doing business in the name National Credit Advisors.
19.
As early as November 2015, PMH began doing business in the name Credit Experts.
20.
PMH offered or provided credit repair to consumers, which is a consumer financial product or service covered by the CFPA, 12 U.S.C. Case 2:16-cv-07111-BRO-JEM Document 54 Filed 02/10/17 Page 4 of 52 Page ID #:731
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§ 5481(15)(A)(viii),(ix), and it therefore is a covered person within the meaning of the CFPA, id. § 5481(6).
21.
PMH is a seller, as defined by the TSR, 16 C.F.R. § 310.2(dd), because, in connection with a telemarketing transaction, it provides, offers to provide, or arranges for others to provide goods or services to customers in exchange for consideration.
22.
PMH is a telemarketer, as defined by the TSR, 16 C.F.R. § 310.2(ff), because, in connection with telemarketing, it initiates or receives telephone calls to or from customers.
THE CREDIT REPAIR OPERATION 23.
PMH has offered, sold and provided credit repair services to consumers beginning on or about October 1, 2014. 24.
PMH has offered, sold and provided credit repair services using several different names, including, but not limited to, Park View Law, Park View Legal, Park View Credit, National Credit Advisors, and Credit Experts. 25.
PMH has marketed its services to consumers nationwide through telemarketing.
26.
Consumers have called PMH after seeing its online advertising. 27.
PMH has called consumers shortly after the consumers have inquired about a loan on a lending website.
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28.
PMH’s customers include individuals who were seeking to obtain a mortgage, loan, refinancing or other extension of credit when they were first contacted by PMH.
29.
During sales calls and in its online advertising, PMH has made deceptive representations to potential consumers about the efficacy and cost of its services and the terms of its “guarantee.”
30.
During sales calls, PMH has stated that it helps consumers increase their credit scores.
31.
During sales calls, PMH has misrepresented its ability to get negative items removed from consumers’ credit reports by failing to make clear that the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. §§ 1681-1681x, only requires the removal of negative information from consumers’ credit reports in limited circumstances.
32.
At times, PMH has represented during calls to consumers that it is a “mortgage affiliate” or otherwise represented that it can help consumers get a mortgage.
33.
For example, during a call with a Bureau investigator on February 22, 2016, PMH stated that it was a “mortgage affiliate.” Case 2:16-cv-07111-BRO-JEM Document 54 Filed 02/10/17 Page 6 of 52 Page ID #:733
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34.
PMH also has marketed its services online through several websites, including www.parkviewlegal.com, www.parkviewcredit.com and www.nationalcreditadvisors.com.
35.
PMH also has marketed its services through the use of Google AdWords.
36.
Google AdWords enable advertisers to display advertisements under the heading “Sponsored Links,” which appear when certain keywords are entered into a search engine.
37.
PMH submitted a list of Google AdWords to the California Department of Justice on November 2, 2015, including, for example: “We Repair Bad Credit Fast Trusted by Over 100k Customers.
87% Success Rate – Free Consult! ParkViewCredit.com/Bad-Credit”
38.
During sales calls, PMH has rushed consumers through the process of signing its online contract.
39.
The terms of these contracts have differed in material ways from PMH’s representations to consumers during sales calls and through its online marketing.
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40.
After consumers have signed up for PMH’s services, PMH has sent letters to consumer reporting agencies disputing items on the consumers’ credit reports.
41.
Any responses to such dispute letters typically have been sent directly to the consumers, not to PMH.
42.
Pursuant to the FCRA, a consumer reporting agency must follow “reasonable procedures to assure maximum possible accuracy” when preparing consumers’ credit reports. 15 U.S.C § 1681e(b). 43.
A consumer reporting agency typically may not report negative items that are more than seven years old, or bankruptcies that are more than ten years old. 15 U.S.C. § 1681c.
44.
If a consumer identifies something incomplete or inaccurate in his or her file and notifies the consumer reporting agency, then the agency must reinvestigate that issue. 15 U.S.C. § 1681i(a)(1). 45.
A consumer reporting agency may continue reporting a disputed item unless after an investigation the disputed item is found to be inaccurate, incomplete, or cannot be verified. 15 U.S.C. § 1681i(a)(5)(A). 46.
The FCRA does not require consumer reporting agencies to investigate frivolous disputes, however. 15 U.S.C. § 1681i(a)(3). Case 2:16-cv-07111-BRO-JEM Document 54 Filed 02/10/17 Page 8 of 52 Page ID #:735
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47.
PMH typically has not obtained credit reports or credit scores after consumers completed services to determine whether negative items had been removed from consumers’ credit reports or if consumers’ credit scores had increased.
PMH HAS CHARGED UNLAWFUL ADVANCE FEES 48.
PMH has requested and received payment for services represented to remove derogatory information from, or to improve, consumers’ credit histories, credit records, or credit ratings.
49.
During the initial sales call, PMH has told some consumers that they must pay an initial fee in order to proceed with the consultation. 50.
PMH has told some consumers that this initial fee was for a credit report.
51.
PMH has represented that this consultation is the first step in the credit repair process.
52.
PMH has marketed this consultation as “free.” 53.
Typically, PMH has charged a fee in connection with this consultation.
54.
PMH has claimed that the initial fee is for a special credit report or “lender report.”
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55.
PMH has provided consumers with a “Credit Authorization & Signature Verification Form” which states that this initial fee will appear on the consumer’s bank statement as “Credit Repair Services.” 56.
PMH has refused to provide consumers with a copy of the contract until after they have consented to pay and or paid the initial fee. 57.
During the initial consultation, an analyst purportedly reviews and discusses the credit report with the consumer and identifies how PMH can help the consumer increase his or her credit score. 58.
If consumers agree to continue the services during the consultation call, then PMH has directed them to sign a lengthy online contract. 59.
Consumers have been hurried through the signature process by a salesperson working on behalf of PMH.
60.
PMH has charged consumers monthly fees after the initial consultation.
61.
PMH has charged a monthly fee of $89.99. 62.
PMH continues to charge the monthly fee until consumers affirmatively cancel their contracts.
63.
PMH has charged a separate set-up fee of several hundred dollars for the first two months, and then charged the monthly fee in later months. Case 2:16-cv-07111-BRO-JEM Document 54 Filed 02/10/17 Page 10 of 52 Page ID #:737
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64.
PMH has requested and collected the initial fee, the set-up fee, and many of the monthly fees from consumers before it has provided them with documentation in the form of a consumer report from a consumer reporting agency demonstrating that the promised results have been achieved, such report having been issued more than six months after the results were achieved. PMH HAS MISREPRESENTED THE EFFICACY OF ITS SERVICES 65.
In numerous instances since as early as October 1, 2014, PMH has misrepresented the efficacy of its services, including its ability to remove negative items and to increase consumers’ credit scores. PMH HAS MISREPRESENTED ITS ABILITY TO REMOVE NEGATIVE ITEMS 66.
PMH has misrepresented its ability to remove negative items from consumers’ credit reports by failing to make clear the limited circumstances in which such items must be removed pursuant to the FCRA. 67.
In numerous instances, PMH represented during sales calls and in its online marketing that it could remove negative items, without making it clear that the FCRA limits the circumstances in which negative items cannot be reported and in which consumer reporting agencies will be required to remove such items. 68.
For example, during an initial sales call on January 19, 2016, PMH stated the following to a Bureau investigator: “And we do the job that you need. I Case 2:16-cv-07111-BRO-JEM Document 54 Filed 02/10/17 Page 11 of 52 Page ID #:738
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mean, if you have damage to your credit no matter what you may have done in the past or what was done to you, we can help you fix it. It’s very simple.” 69.
For example, during an initial sales call on February 22, 2016, PMH stated the following to a Bureau investigator: “But I can tell you that no matter what it is—I mean, unless—realistically, unless we’re talking about like a bankruptcy that you just had discharged like last month or if we’re talking about an unpaid judgment or an unpaid tax lien . . . there’s really nothing that we can’t dispute on your credit history.”
70.
For example, on April 20, 2016, one consumer who was looking for a mortgage completed information on an online lending website. 71.
The consumer complained that she immediately received several calls, including from a company representing itself as Park View Credit. 72.
The consumer complained that the woman with whom she spoke assured her that she could “get rid of” things on the consumer’s credit report so that the consumer could get a mortgage.
73.
For example, scripts that PMH provided to the California Department of Justice on November 2, 2015, included the following language: “We use the Fair Credit Reporting Act to dispute negative accounts that may be appearing on your credit report for removal. Naturally, anytime one or more of these items are taken off your reports your scores will increase. On average, we have about a 73% Case 2:16-cv-07111-BRO-JEM Document 54 Filed 02/10/17 Page 12 of 52 Page ID #:739
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deletion rate of the negative items that are found on most client’s [sic] credit reports.”
74.
On October 7, 2015, the website www.parkviewcredit.com included the following question on the “Frequently Asked Questions” page: “What can be deleted?”
75.
If the consumer clicked on that link, the following language would appear: “We have successfully deleted every type of negative item throughout our years of service. Be sure to ask one of our Customer Service representatives for a list of these items, or refer to our results page to see actual result letters from our customers.”
76.
PMH has misrepresented its ability to remove negative items through including alleged testimonials or descriptions of individual consumers’ results on its websites.
77.
These testimonials or descriptions of individual consumers’ results have implied that such results were representative of what consumers would experience through using PMH’s services.
78.
For example, on October 10, 2014, the homepage for PMH’s website, www.parkviewcredit.com included the following image and text prominently at the top of the page:
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79.
This webpage included, in prominent type at the top, “Remove Multiple Charge Off’s [sic] from Your Credit Report!” and an image of what appears to be a document from TransUnion listing several highlighted items with the words “DELETED” to the right of each item.
80.
Directly below appeared a testimonial from “Tom Brewster, Real Customer,” describing how the consumer stopped paying most of his debts, which were then sent to collection agencies as charge-offs, and how he ultimately filed for bankruptcy.
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81.
Under the heading in bold, “Park View Legal changed my life forever,” the alleged testimonial explained that he received letters from credit bureaus stating his negative items had been deleted and that his credit score improved.
82.
The alleged testimonial from Mr. Brewster also appeared on the website www.parkviewcredit.com on April 25, 2015. 83.
The alleged testimonial from Mr. Brewster did not indicate that any of the items on his credit report were inaccurate or obsolete. 84.
The page containing the alleged testimonial from Mr. Brewster did not make clear that the FCRA only requires consumer reporting agencies to remove charge-offs and bankruptcies from consumers’ credit reports in limited circumstances.
85.
For example, on September 2, 2015 the “Results” page of the website www.parkviewcredit.com included a description of results purportedly obtained for Richard Dunn, who had three judgments removed within one month of working with PMH.
86.
This description did not indicate that any of the judgments on Mr. Dunn’s credit report were inaccurate or obsolete. Case 2:16-cv-07111-BRO-JEM Document 54 Filed 02/10/17 Page 15 of 52 Page ID #:742
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87.
The page containing the description of Mr. Dunn’s results did not make clear that the FCRA only requires consumer reporting agencies to remove judgments from consumers’ credit reports in limited circumstances. 88.
PMH has misrepresented its ability to get certain items removed from individual consumers’ credit reports.
89.
For example, a consumer complained on May 16, 2015, that PMH assured her it could get rid of her four-year old bankruptcy on her credit report. 90.
The consumer complained that her four-year old bankruptcy was still on her credit report and her credit score had not changed as a result of PMH’s services.
91.
For example, a consumer who started PMH’s services on May 24, 2015, complained that PMH told her that it could get rid of medical collections on her credit report because those items could not be reported due to “HIPAA laws.” 92.
The consumer complained that her score actually decreased after using PMH’s services.
93.
PMH did not have a basis for making statements to consumers regarding its ability to remove negative items from consumers’ credit reports without appropriate qualifications.
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PMH HAS MISREPRESENTED ITS ABILITY TO IMPROVE CONSUMERS’ CREDIT SCORES 94.
PMH has misrepresented, explicitly and implicitly, its ability to increase consumers’ credit scores.
95.
PMH has misrepresented to consumers that its credit repair services resulted in an average credit score increase of over 100 points. 96.
PMH typically has not obtained credit reports or credit scores after consumers have used its services.
97.
PMH typically has not reviewed consumers’ credit scores to determine whether their credit scores increased after utilizing PMH’s credit repair services.
98.
Because PMH does not track whether its consumers’ credit scores have improved after using its services, PMH lacks a reasonable basis for representing that its credit repair services have resulted in an average credit score increase of over 100 points.
99.
In numerous instances, PMH has represented in phone calls with consumers that it substantially raises its customers’ credit scores, often stating that it raises scores by an average of more than 100 points. Case 2:16-cv-07111-BRO-JEM Document 54 Filed 02/10/17 Page 17 of 52 Page ID #:744
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100. For example, during an initial sales call with a Bureau investigator on January 19, 2016, PMH made numerous references to credit score increases of 100 plus points.
101. PMH stated that its success was partially due to the fact that it purchases “lender reports” instead of other credit reports. 102. PMH also explained, “There’s more than one type of credit report. The same process . . . of the lender report for accuracy to make sure that we’re able to help you and increase your scores an average of 100 plus points is because we use the lender report because of its accuracy . . . .” 103. PMH then stated, “As we remove these items, that is, in turn, what increases the FICO scores an average of 100 plus points.” 104. During a different initial sales call with a Bureau investigator on February 22, 2016, PMH again made numerous references to credit score increases.
105. For example, PMH stated: “Average increase for any client that we work with is between 100 to 120 points. So, the guarantee is that if you don’t see any results within six months, we give you your money back.” 106. PMH further stated during the call: “I mean, I – average client that we work with, their score increases by about 100 to 120 points, no matter what it is that we’re disputing.”
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107. PMH has included language about its average credit score increase in its telemarketing scripts.
108. For example, telemarketing scripts that PMH submitted to the California Department of Justice on November 2, 2015, stated that PMH “raise[s] credit scores an average of 104 pts . . . for people that stick with the program for 6 months or more” and that “we typically average 80 to 104 points when we work on credit[.]”
109. PMH also submitted a revised telemarketing script to the California Department of Justice on July 13, 2016, that included the following language: “Our clients see an average increase of 80 to 104 Pts increase on their FICO scores!” 110. For example, PMH’s websites have included alleged testimonials or descriptions of individual results from alleged consumers claiming that the consumer’s scores increased significantly as a result of PMH’s services. 111. These testimonials implied that the results were typical of what consumers would generally achieve when using its services. 112. For example, on September 2 and September 30, 2015, PMH’s website www.parkviewcredit.com included the following statement about an alleged consumer, Ann Townsend: “Beginning our program, Ms. Townsend’s average score was a 544. Within five months, Park View Credit was able to Case 2:16-cv-07111-BRO-JEM Document 54 Filed 02/10/17 Page 19 of 52 Page ID #:746
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completely eliminate every each negative account on her Experian report, raising her score to a whopping 819.”
113. For example, on September 20, 2016, the website www.nationalcreditadvisor.com included a page entitled, “National Credit Advisors - Credit Repair Has Helped People Like You.” 114. This page included three alleged testimonials stating, respectively, that: 1) PMH increased the consumer’s score “up over 700” from an initial score of 580, helping the consumer get a house; 2) the consumer’s score increased from 567 to 618 within one month, and the consumer was able to buy a house; and 3) the consumer’s score increased “by close to 200 points” and “everything is fine now.” 115. According to information provided to the Bureau by PMH, the basis for PMH’s assertion that its credit repair services have resulted in customers improving their credit scores by an average of 104 points is information purportedly obtained by a different company, namely one of the credit repair companies whose assets PMH purchased on October 1, 2014. 116. Specifically, on June 16, 2015, the Bureau advised PMH by phone and by letter that Enforcement Counsel were considering recommending that the Bureau take legal action against PMH.
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117. The Bureau also informed PMH that it could, if it wished, submit a response detailing any reasons of law or policy as to why the Bureau should not take legal action against PMH.
118. The Bureau also notified PMH that the Bureau may use information contained in any submission as an admission, or in any other manner permitted by law, in connection with CFPB enforcement proceedings or otherwise. 119. PMH provided a written response (also known as a “NORA response”) to the Bureau on June 30, 2015.
120. In this response, PMH stated that its credit repair product has resulted in customers improving their credit scores by an average of 104 points. 121. In support of this assertion, PMH stated that a predecessor company had improved its clients’ credit scores by an average of 104 points during the first 18 months of its operations.
122. The predecessor company began offering credit repair services in 2009.
123. PMH also stated in its NORA response that the “vast majority of credit repair customers” during that 18-month period “were interested in obtaining financing for commercial equipment leases[,]” but were “unable to get lease financing because they were not credit-worthy after the financial crisis in 2008.” Case 2:16-cv-07111-BRO-JEM Document 54 Filed 02/10/17 Page 21 of 52 Page ID #:748
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124. PMH stated in its NORA response: “Throughout these 18 months, the [predecessor company] offered credit repair services through a monitoring program maintained by a credit bureau. During this time, the average credit score improvement was 104 points, which was definitely proven through the monitoring program.”
125. The predecessor credit repair company did not analyze the average credit score increase of all consumers who received its credit repair services. 126. The predecessor credit repair company did not analyze the average credit score increase of a representative sample of consumers who received its credit repair services.
127. Rather, the predecessor credit repair company only analyzed the credit score increases of a subset of its clients, namely business owners who applied for commercial equipment financing on at least two separate occasions from an affiliated commercial equipment lease financing company. 128. The majority owner of the predecessor credit repair company was also a partial owner of a commercial equipment lease financing company. 129. The predecessor credit repair company provided credit repair services to consumers who had sought financing through the commercial equipment lease financing company.
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130. The predecessor credit repair company used the business owners’ credit scores from when they first applied for financing from the commercial equipment lease financing company as the baseline credit score. 131. If a business owner applied for additional financing from the commercial equipment lease financing company, then the predecessor credit repair company pulled the business owner’s credit score again, and compared it to the earlier credit score.
132. The length of time between the first and second credit pull was not uniform, and depended on when the business owner again sought financing from the commercial equipment lease financing company. 133. Only a subset of the predecessor company’s credit repair customers applied for additional commercial equipment leasing financing. 134. The data did not include dissatisfied customers who declined to seek additional financing from the commercial equipment lease financing company. 135. The data did not include customers whose businesses had failed or who believed they were not in a position to apply for financing again. 136. Because the predecessor company based its analysis on a skewed, cherry-picked data set, its analysis did not actually measure the average credit score increase of its customers.
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137. Because the predecessor credit repair company did not actually measure the average credit score increase obtained by consumers who utilized its services, PMH has lacked a reasonable basis for its statement that it increases credit scores by an average of over 100 points. 138. Because the predecessor credit repair company did not actually measure the average credit score increase obtained by consumers who utilized its services, PMH’s representations that it increases credit scores by an average of over 100 points were false.
139. Even if the predecessor credit repair company had accurately calculated the average credit score increase resulting from its credit repair services, PMH lacked a reasonable basis for extrapolating that average to its own client base.
140. The predecessor credit repair company only analyzed the credit score increases of a select subset of business owners. 141. Such business owners tend to have a different credit profile than the average population.
142. For example, small business owners often use personal and business credit card and business accounts interchangeably, which results in different spending patterns.
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143. Such differences in spending patterns can affect consumers’ credit scores, as well the variability of those scores over time. 144. In contrast to the customers whose credit scores the predecessor credit repair company measured, PMH’s client base has not been comprised exclusively of business owners.
145. Rather, PMH has marketed its services to consumers seeking financing for personal reasons, such as buying a home. 146. In particular, PMH has targeted consumers with credit scores below 640, who are even less likely than the general population to achieve credit score increases of over 100 points.
147. Telemarketing scripts that PMH provided to the California Department of Justice on November 5, 2015 indicate that PMH has targeted consumers with credit scores below 640.
148. These scripts assured consumers that PMH could help raise their scores to over 640, and included the following statement: “Well, (customer name), the minimum FICO score required [for financing] is at least a 640 . . . but don’t worry, because we work hand and hand with a company called [PMH]. They raise credit scores an average of 104pts . . . .”
149. It is extremely rare for a consumer’s dispute of information in a credit report to result in a FICO score increase of more than 100 points. Case 2:16-cv-07111-BRO-JEM Document 54 Filed 02/10/17 Page 25 of 52 Page ID #:752
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150. It is even more rare for a consumer with a credit score below 640 to obtain a FICO score increase of more than 100 points as a result of a dispute of information in a credit report.
151. In December 2012, the Federal Trade Commission (FTC) published a study of consumers who received assistance in identifying potential errors on their credit reports and then used the FCRA’s dispute process to challenge those errors. See Federal Trade Commission, Report to Congress Under Section 319 of the Fair and Accurate Credit Transactions Act of 2003 (2012), available at https://www.ftc.gov/sites/default/files/documents/reports/section-319-fair-andaccurate-credit-transactions-act-2003-fifth-interim-federal-tradecommission/130211factareport.pdf.
152. The FTC’s study was designed to statistically replicate and evaluate a nationally representative sample of FICO scores. 153. Of the 1,001 participants in the study, 263 participants identified potential errors in their credit reports with the aid of a consultant and filed disputes. 154. Those who filed disputes experienced, on average, a 6.1 point increase in their average FICO score.
155. Only 4 study participants experienced a FICO score increase of greater than 100 points, or 1.5% percent of those who filed disputes. Case 2:16-cv-07111-BRO-JEM Document 54 Filed 02/10/17 Page 26 of 52 Page ID #:753
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156. Three of these 4 participants had average scores over 679 before the increase.
157. The FTC’s study found that consumers with lower credit scores tended to experience lower FICO score increases when they filed disputes. 158. For example, consumers with credit scores between 590 and 679 gained 5.4 points on average, and consumers with credit scores less than 590 gained 4.6 points on average.
159. The FTC study suggests that PMH’s clients would be even less likely than the general population to experience credit score increases of over 100 points as a result of using the dispute process to challenge items on their credit report. 160. PMH lacked a reasonable basis for representing that it increases credit scores by an average of over 100 points because it has relied on data that does not indicate that PMH increases credit scores by an average of over 100 points. 161. PMH lacked a reasonable basis for representing that it increases credit scores by an average of over 100 points because it has relied on data comprised of a subset of consumers who are distinguishable from its own client base. 162. Numerous consumers also have stated that PMH told them it would increase their credit scores, often by a specific or significant amount. Case 2:16-cv-07111-BRO-JEM Document 54 Filed 02/10/17 Page 27 of 52 Page ID #:754
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163. For example, a consumer who began service with PMH on May 24, 2015, complained that PMH assured her it would be able to get her FICO score up to 640 so she could obtain a home loan.
164. The consumer complained that despite paying PMH $800, her credit score had decreased since using PMH’s services. 165. Another consumer complained that in March 2015, PMH told her that her credit score would increase to over 600 points within three months. 166. The consumer further complained that three months later, her score had not changed.
167. PMH did not have access to proprietary information about how credit scores are calculated when it made claims about increasing consumers’ credit scores by a specific amount.
168. PMH typically has not obtained consumers’ credit reports or credit scores after consumers have used its services. 169. PMH typically has not reviewed consumers’ credit scores to determine whether their credit scores increased after utilizing PMH’s credit repair services.
170. Because PMH has not measured the credit score increase of consumers who utilized its services, it has lacked a reasonable basis for representing that it could increase consumers’ credit scores. Case 2:16-cv-07111-BRO-JEM Document 54 Filed 02/10/17 Page 28 of 52 Page ID #:755
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PMH HAS MISREPRESENTED THE TERMS OF ITS “GUARANTEE” AND FAILED TO CLEARLY AND CONSPICUOSLY DISCLOSE THE TRUE LIMITS OF ITS “GUARANTEE”
PMH’s MARKETING OF ITS “GUARANTEE”
171. PMH has represented that it offers a money-back guarantee. 172. PMH’s marketing creates the impression that if a consumer is not satisfied with its credit repair services, then the consumer can obtain a refund. 173. For example, on April 25, 2015, the website www.parkviewcredit.com included the following statement under the header, “Money Back Guarantee”: “If we don’t get the job done, you get your money back.”
174. On September 2, 2015, the website www.parkviewcredit.com included the statement that PMH had a “Risk Free Money Back Guaranteed[sic]” in contrast to its competitors.
175. For example, during an initial sales call with a Bureau investigator on January 19, 2016, PMH stated: “Most importantly, our services come in writing. So, well, once you have something in the contract for obligation, that speaks for itself. And we do the job that you need. I mean, if you have damage to your credit no matter what you may have done in the past or what was done to you, we can help you fix it. It’s very simple.”
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176. During that same call, PMH further explained: “We can fix the issues at hand. I cannot guarantee what you’ll do . . . Though as far as the work goes, once again, our services do come in writing, so we can guarantee that. As long as you maintain consistent payments, then you should be fine. But I can’t guarantee anything beyond our control.”
177. Telemarketing scripts submitted by PMH to the California Department of Justice on November 2, 2015, stated “We are the only credit repair company that offers a full money back guarantee.” 178. In numerous instances, PMH represented that it was guaranteeing an increase in credit scores or that it would remove particular negative items. 179. For example, on October 10, 2014 and April 25, 2015, the website www.parkviewcredit.com included the following language: “Myth #2 Repairing your credit is never a sure thing. Not with us! We’re so confident in our services we GUARANTEE our services. If we don’t raise your credit score, you don’t pay. Period. Don’t believe us? Call and ask one of our Credit Repair Specialists!” 180. For example, when asked if National Credit Advisor guarantees a credit score increase during an initial sales call on February 22, 2016, PMH stated the following to a Bureau investigator: “Sure, yeah. Average increase for any client that we work with is between 100 to 120 points. So, the guarantee is that if you don’t see any results within six months, we give you your money back.” Case 2:16-cv-07111-BRO-JEM Document 54 Filed 02/10/17 Page 30 of 52 Page ID #:757
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181. Consumers have complained that PMH told them it would give them their money back if it did not remove a particular negative item or items. 182. For example, a consumer complained on or about July 14, 2015, that PMH told her that if none of the items on her credit report were deleted in six months, then she would get all of her money back. This consumer complained that two different PMH employees told her on several occasions that the company had a “100% money back guarantee.”
183. When this consumer called the company on or about July 8, 2015, to request a refund, PMH initially told her that she would receive a refund because the company had not deleted any negative items. 184. PMH later informed the consumer that the contract she signed did not guarantee the removal of negative items after all. 185. When the consumer asked that the company listen to the call recordings so that they could verify she had been promised she would get her money back if the company did not delete the negative items, PMH told her that the call recordings had been deleted.
PMH’S ACTUAL GUARANTEE DIFFERS FROM ITS MARKETING 186. PMH’s marketing has created an impression of its guarantee that is materially different from the guarantee contained in its sales contracts. Case 2:16-cv-07111-BRO-JEM Document 54 Filed 02/10/17 Page 31 of 52 Page ID #:758
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187. PMH has not clearly and conspicuously disclosed all material terms of its refund policy in its marketing to consumers. 188. PMH has not provided consumers with a copy of its sales contract until after the consumer has provided payment information for the initial fee in connection with the “free” consultation.
189. PMH’s sales contracts have typically limited the guarantee to the removal of “a minimum of one (1) Disputed item within one hundred and eighty days (180) of the execution of this Agreement.” 190. PMH has construed this provision as requiring customers to pay for a full six months of services to be eligible for this guarantee. 191. For example, on April 19, 2016, PMH called a consumer shortly after he registered on an online lending website.
192. PMH asked the consumer to pay $59.95 so it could pull up his credit report.
193. The consumer provided PMH the payment information for the credit report.
194. PMH then transferred the consumer to a different salesperson, who told the consumer that PMH would remove numerous items from his credit report in exchange for $550.
195. The consumer agreed to pay $550.
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196. After the consumer agreed to pay the $550, PMH provided the consumer with a contract.
197. Within 24 hours of this conversation with PMH, the consumer reviewed the contract and realized that it contradicted much of what PMH had told him regarding the benefits of its services and its “guarantee.” 198. The consumer demanded a refund, and PMH initially refused to refund the consumer the $59.95 initial fee. 199. PMH only provided a full refund after the consumer complained to third parties.
200. Consumers have complained that when PMH provided them the contract, PMH rushed them through the signing process. 201. For example, a consumer complained on or about August 28, 2015, regarding PMH’s refusal to provide her with a refund. 202. This consumer made an initial payment of $59.95, followed by a payment of $600, which she believed was for PMH to fix her credit. 203. She complained that when PMH provided her a contract, it urged her just to initial at the bottom of each page and rushed her through the signing process.
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204. Although PMH had told the consumer that she would not have to pay anything after the $600 fee, PMH then charged the consumer an $89.99 monthly charge.
205. The consumer complained that despite paying $749.98, her credit had not improved.
206. The consumer also complained that she had been guaranteed her money back, but that PMH had refused to provide her with a refund. 207. On or about August 31, 2015, in responding to the consumer’s complaint, PMH stated that the consumer did not qualify for a refund because she had not paid for six months of services, and refused to provide one to her. 208. Other consumers encountered similar difficulty in obtaining refunds from PMH.
209. PMH has construed its guarantee as meaning that so long as PMH removes a single “disputed item” within six months, consumers cannot obtain a refund, even if their credit scores do not improve. PMH MISREPRESENTED THE COST OF ITS SERVICES 210. PMH has failed to disclose to consumers during sales calls that they would be charged a monthly fee.
211. For example, a consumer complained on or about August 14, 2015, that PMH had represented that the total cost of service was $600. Case 2:16-cv-07111-BRO-JEM Document 54 Filed 02/10/17 Page 34 of 52 Page ID #:761
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212. After the consumer had paid PMH $600 for credit repair services, PMH then informed the consumer there would be an additional charge of $89.99 a month.
213. For example, a consumer complained on or about August 28, 2015, that in a February or March 2015 sales call, PMH did not mention a monthly fee and instead represented that she would only have to pay $600 to proceed with services.
214. The consumer further complained that PMH told her that she would be saving money because she had been using a competitor’s credit repair services that charged monthly fees.
215. The consumer further complained that after she paid PMH $600, PMH unexpectedly charged her $89.99.
216. Some of PMH’s telemarketing scripts failed to inform consumers of the monthly fees for its services.
217. For example, PMH submitted telemarketing scripts to the California Department of Justice on November 2, 2015, that did not mention monthly fees, and instead included the following language: “Depending on how serious your case is, they will give you a set cost based on how much work your case needs. It can be a few hundred dollars or more, (200-800) is the range, and they will apply the $59.95 used to pull the reports towards your repair.” Case 2:16-cv-07111-BRO-JEM Document 54 Filed 02/10/17 Page 35 of 52 Page ID #:762
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PMH’S WEBSITE PROVIDES AN EXAMPLE OF HOW ITS MARKETING DIFFERS FROM TERMS IN ITS CONTRACTS 218. PMH’s marketing has created the impression that PMH can remove any negative item from consumers’ credit reports; that the removal of these negative items will significantly improve consumer’s credit scores; and that if PMH fails to deliver these results, then consumers can get their money back. 219. For example, on July 6, 2015, and September 2, 2015, the homepages for www.parkviewlegal.com and www.parkviewcredit.com, respectively, represented to consumers that PMH would improve consumers’ credit scores by challenging negative items on their credit report, and that consumers could get their money back if PMH failed to do so.
220. On July 6, 2015 and September 2, 2015, the homepages for these websites prominently stated at the top of the page: “Repair your credit score today.”
221. Toward the middle of this page, these websites stated “Why Repair Your Credit with [Park View Legal or Park View Credit]?” 222. Directly below, and in the center of the page, appeared the following image and text:
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223. This graphic included the statements, “GUARANTEED”, “NO WIN, NO FEE”, and, “We only accept cases if we are confident we can improve your credit score.”
224. Another graphic stated:
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225. This graphic included the statements, “WE GET THE JOB DONE!” and “We have successfully improved the credit score rating of over 85% of the cases we have received results for.”
226. Toward the bottom of the homepage, under the statement “Our Process” appeared three columns of text.
227. The first column, “CREDIT EVALUATION”, stated:
228. This column describes how PMH will go through each consumer’s credit report “line-by-line” so that PMH can “identify which items we think are disputable, how long it will take, and how much it will cost.” This section concludes by stating “we will waste no time in fighting these negative items and getting you on your way to a higher credit score!”
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229. The second column of text, “FIGHTING YOUR CASE”, contained the following language:
230. This language describes how PMH will identify items to dispute and will contact “the major credit bureaus and individual creditors in order to have these items removed.” It concludes with the sentence, “There are lots of things we can get removed – here’s some we’ve removed in the past,” and lists the following directly beneath: Late payments, Bankruptcies, Liens, Charge offs, Many more.
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231. The third column, “A NEW START”, contained the following text:
232. This column begins “There is nothing quite like the feeling of watching your credit score rise.” It goes on to discuss how an improved credit score can help consumers “get better interest rates” and can make a “huge difference” when seeking to buy a house.
233. In addition, these webpages included the following statements in the middle of the page: “No improvement no charge” and “Thousands of successful results.”
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234. Consumer reporting agencies are not required to remove the negative items listed in paragraphs 229-230 unless after an investigation the disputed item is found to be inaccurate, incomplete, or cannot be verified. 235. PMH’s contracts have only guaranteed the removal of a single “disputed item” from consumers’ credit reports within 180 days, regardless of whether that removal actually increases the consumer’s credit score. 236. PMH has not guaranteed results until 180 days after the execution of the consumer’s contract.
237. PMH has denied refunds to consumers who requested a refund before paying for six months of service.
COUNT I Advance Fees in Violation of the TSR 238. The allegations in paragraphs 1-237 are incorporated by reference. 239. It is an abusive act or practice under the TSR for a seller or telemarketer to request or collect fees for credit repair services until the seller has provided the person with documentation in the form of a consumer report from a consumer reporting agency demonstrating that the promised results have been achieved, such report having been issued more than six months after the results were achieved.
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240. Because PMH is a telemarketer, seller, or both, PMH’s request for and collection of fees for credit repair services before providing consumers with documentation in the form of a consumer report from a consumer reporting agency demonstrating that the promised results have been achieved, such report having been issued more than six months after the results were achieved violates the TSR. 16 C.F.R. § 310.4(a)(2).
COUNT II Misrepresentations about Material Aspects of the Efficacy of Its Services in Violation of the TSR 241. The allegations in paragraphs 1-237 are incorporated by reference. 242. It is a deceptive act or practice under the TSR for a seller or telemarketer to misrepresent any material aspect of the efficacy of their services. 16 C.F.R. § 310.3(a)(2)(iii).
243. In numerous instances, in connection with the offering or provision of credit repair services, PMH has represented, directly or indirectly, expressly or by implication, that its actions will or likely will result in the removal of material negative entries on consumers’ credit reports.
244. In numerous instances, in connection with the offering or provision of credit repair services, PMH has represented, directly or indirectly, expressly or by Case 2:16-cv-07111-BRO-JEM Document 54 Filed 02/10/17 Page 42 of 52 Page ID #:769
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implication that its actions will or likely will result in a substantial increase to consumers’ credit scores.
245. These representations have been material and likely to mislead consumers acting reasonably under the circumstances. 246. PMH has lacked a reasonable basis for making these representations. 247. PMH lacked a reasonable basis for representing that its services increase consumers’ credit scores by an average of over 100 points because the alleged information upon which PMH has relied was limited to a subset of its predecessor company’s clients, namely small business owners who sought financing for commercial equipment lease financing on at least two separate occasions.
248. PMH lacked a reasonable basis for representing that it could improve consumers’ scores by a certain amount because it did not have access to proprietary information about how those scores are calculated. 249. Because PMH did not typically evaluate whether consumers’ credit scores increased after receiving PMH’s credit repair services, PMH has lacked a reasonable basis for representing that it increases consumers’ credit scores by an average of over 100 points.
250. Because PMH did not typically evaluate whether consumers’ credit scores increased after receiving PMH’s credit repair services, PMH’s Case 2:16-cv-07111-BRO-JEM Document 54 Filed 02/10/17 Page 43 of 52 Page ID #:770
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representations that it increases consumers’ credit scores by an average of over 100 points were false.
251. PMH lacked a reasonable basis for representing that it could remove negative items when it did not have information indicating that such items were inaccurate or obsolete. 15 U.S.C. §§ 1681c(a),e(b). 252. PMH lacked a reasonable basis for representing without appropriate qualifications that it could remove negative items because only inaccurate, incomplete, or unverifiable information must be removed from consumers’ credit reports following a reinvestigation. 15 U.S.C. § 1681i(a)(1)(A),(5)(A). 253. Because PMH typically has not obtained credit reports or credit scores after consumers had completed services to determine if negative items were removed or if scores increased, its own results also could not provide a reasonable basis for such claims.
254. Because PMH lacked a reasonable basis for its representations regarding its ability to increase consumers’ credit scores and to remove negative items, those representations were deceptive.
255. Because PMH is a telemarketer, seller, or both, PMH’s material misrepresentations about the efficacy of its services violates the TSR. 16 C.F.R. § 310.3(a)(2)(iii).
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COUNT III Failure to Disclose Limitations on Guarantee in Violation of the TSR 256. The allegations in paragraphs 1-237 are incorporated by reference. 257. It is a deceptive act or practice under the TSR for a seller or telemarketer to fail to clearly and conspicuously disclose material terms and conditions in an advertised refund policy before a consumer consents to pay. 16 C.F.R. § 310.3(a)(1)(iii).
258. PMH has represented that its services come with a money-back guarantee.
259. PMH has failed to clearly and conspicuously disclose the limitations that its contracts place on this guarantee before consumers consent to pay. 260. PMH has misrepresented, directly or indirectly, expressly or by implication, the terms of this guarantee.
261. Because PMH is a telemarketer, seller, or both, PMH’s failure to clearly and conspicuously disclose the material terms and conditions of its refund policy before a consumer consents to pay for goods or services violates the TSR. 16 C.F.R. § 310.3(a)(1)(iii).
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COUNT IV Misrepresentations Regarding the Cost of Services in Violation of the TSR 262. The allegations in paragraphs 1-237 are incorporated by reference. 263. It is a deceptive act or practice under the TSR for a seller or telemarketer to misrepresent, directly or by implication, the total cost to purchase the goods and services that are subject of the sales offer. 16 C.F.R. § 310.3(a)(2)(i). 264. PMH has misrepresented the total cost of its credit repair services. 265. These representations have been material and likely to mislead consumers acting reasonably under the circumstances. 266. Because PMH is a telemarketer, seller, or both, PMH’s misrepresentations about the total cost of the credit repair services violate the TSR. 16 C.F.R. § 310.3(a)(2)(i).
COUNT V Deceptive Acts or Practices in Violation of the CFPA 267. The allegations in paragraphs 1-237 are incorporated by reference. 268. In numerous instances, in connection with the offering or provision of credit repair services, PMH has, directly or indirectly, expressly or by implication, made material misrepresentations regarding the efficacy of its credit repair services.
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269. In numerous instances, in connection with the offering or provision of credit repair services, PMH has represented, directly or indirectly, expressly or by implication, that its actions will or likely will result in the removal of material negative entries on consumers’ credit reports. 270. In numerous instances, in connection with the offering or provision of credit repair services, PMH has represented, directly or indirectly, expressly or by implication that its actions will or likely will result in a substantial increase to consumers’ credit scores.
271. These representations have been material and likely to mislead consumers acting reasonably under the circumstances. 272. PMH has lacked a reasonable basis for making these representations. 273. PMH lacked a reasonable basis for representing that its services increase consumers’ credit scores by an average of over 100 points because the information upon which PMH has relied was limited to a subset of its predecessor company’s clients, namely small business owners who sought financing for commercial equipment lease financing on at least two separate occasions. 274. PMH lacked a reasonable basis for representing that it could improve consumers’ scores by a certain amount because it did not have access to proprietary information about how those scores are calculated. Case 2:16-cv-07111-BRO-JEM Document 54 Filed 02/10/17 Page 47 of 52 Page ID #:774
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275. Because PMH typically has not obtained credit reports or credit scores after consumers completed services to determine if consumers’ credit scores improved, its own results also could not provide a reasonable basis for claims that it increases consumers’ credit scores by a significant amount. 276. Because PMH did not typically evaluate whether consumers’ credit scores increased after receiving PMH’s credit repair services, PMH has lacked a reasonable basis for representing that it increases consumers’ credit scores by an average of over 100 points.
277. Because PMH did not typically evaluate whether consumers’ credit scores increased after receiving PMH’s credit repair services, PMH’s representations that it increases consumers’ credit scores by an average of over 100 points were false.
278. PMH lacked a reasonable basis for representing that it could remove negative items when it did not have information indicating that such items were inaccurate or obsolete. 15 U.S.C. §§ 1681c(a),e(b). 279. PMH lacked a reasonable basis for representing without appropriate qualifications that it could remove negative items because only inaccurate, incomplete, or unverifiable information must be removed from consumers’ credit reports following a reinvestigation. 15 U.S.C. § 1681i(a)(1)(A),(5)(A). Case 2:16-cv-07111-BRO-JEM Document 54 Filed 02/10/17 Page 48 of 52 Page ID #:775
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280. Because PMH typically has not obtained credit reports or credit scores after consumers had completed services to determine if negative items were removed, its own results also could not provide a reasonable basis for such claims. 281. Because PMH lacked a reasonable basis for its representations regarding its ability to increase consumers’ credit scores and to remove negative items, those representations were deceptive.
282. Because PMH lacked a reasonable basis for these representations regarding its ability to increase consumers’ credit scores and to remove negative items, those representations were deceptive.
283. In numerous instances, in connection with the offering or provision of credit repair services, PMH has, directly or indirectly, expressly or by implication, made material misrepresentations regarding the terms of its guarantee. 284. PMH’s marketing has created the net impression that consumers can obtain a full refund if they are not satisfied with PMH’s services. 285. PMH’s guarantee policy is limited to the removal of one “disputed” item with 180 days, and only applies if consumers to pay for six months of services, however.
286. In numerous instances, in connection with the offering or provision of credit repair services, PMH has, directly or indirectly, expressly or by implication, made material misrepresentations regarding the costs of its credit repair services. Case 2:16-cv-07111-BRO-JEM Document 54 Filed 02/10/17 Page 49 of 52 Page ID #:776
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287. These representations regarding the efficacy of its services, the terms of its guarantee, and the cost of PMH’s services have been material and likely to mislead consumers acting reasonably under the circumstances. 288. Therefore, PMH’s representations as described herein have constituted deceptive acts or practices in violation of Sections 1031 and 1036 of the CFPA, 12 U.S.C. §§ 5531, 5536.
THIS COURT’S POWER TO GRANT RELIEF 289. The CFPA empowers this Court to grant any appropriate legal or equitable relief including, without limitation, a permanent or temporary injunction, rescission or reformation of contracts, the refund of monies paid, restitution, disgorgement or compensation for unjust enrichment, and monetary relief, including but not limited to civil money penalties, to prevent and remedy any violation of any provision of law enforced by the Bureau. 12 U.S.C. §§ 5538(a); 5565(a), (c).
PRAYER FOR RELIEF The Bureau requests that the Court, as permitted by 12 U.S.C. § 5565: a.
Permanently enjoin Defendant from committing further violations of the CFPA and the TSR and other provisions of Federal consumer financial law as defined by 12 U.S.C. § 5481(14);
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b.
Grant additional injunctive relief as the Court may deem to be just and proper;
c.
Award damages and other monetary relief against Defendant as the Court finds necessary to redress injury to consumers resulting from Defendant’s violations of the CFPA and the TSR, including but not limited to rescission or reformation of contracts, the refund of monies paid, restitution, disgorgement or compensation for unjust enrichment;
d.
Award Plaintiff civil money penalties; and e.
Award Plaintiff the costs of bringing this action, as well as such other and additional relief as the Court may determine to be just and proper. Dated: February 10, 2017
Respectfully submitted,
Anthony Alexis Enforcement Director
Deborah Morris Deputy Enforcement Director
Craig Cowie Assistant Litigation Deputy
/s/ Sarah Preis
Sarah Preis (Email: [email protected]) (Phone: 202-435-9318) Colin Reardon Case 2:16-cv-07111-BRO-JEM Document 54 Filed 02/10/17 Page 51 of 52 Page ID #:778
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(Email: [email protected]) (Phone: 202-435-9668) Benjamin Clark (Email: [email protected]) (Phone: 202-435-7871) 1700 G Street NW Washington, DC 20552 Fax: (202) 435-7722
Attorneys for Plaintiff Consumer Financial Protection Bureau
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Judgment ()
PDF of this document (14 pages)
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UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA
Consumer Financial Protection Bureau,
Plaintiff,
v.
Prime Marketing Holdings, L.L.C.
(d.b.a. Park View Credit, National Credit Advisor, and Credit Experts),
Defendant.
Case No. 2:16-cv-07111-BRO (JEM)
STIPULATED FINAL JUDGMENT AND ORDER
Plaintiff, the Consumer Financial Protection Bureau (“Bureau”) commenced this civil action against Defendant Prime Marketing Holdings, L.L.C. (d.b.a. Park View Credit, National Credit Advisor, and Credit Experts) on September 22, 2016, to obtain injunctive relief, damages and other monetary relief, and civil money penalties.
The Second Amended Complaint (“Complaint”) alleges violations of §§ 1031(a) and 1036(a)(1) of the Consumer Financial Protection Act of 2010 (“CFPA”), 12 U.S.C. §§ 5531(a), 5536(a)(1), and the Telemarketing Sales Rule (“TSR”), 16 C.F.R. Part 310, which implements the Telemarketing and Consumer Fraud and Abuse Prevention Act (“Telemarketing Act”), 15 U.S.C. §§ 6101-6108. JS-6 Case 2:16-cv-07111-BRO-JEM Document 86 Filed 08/31/17 Page 1 of 14 Page ID #:1092
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Plaintiff and Defendant request that the Court enter this Stipulated Final Judgment and Order (“Order”).
FINDINGS 1) This Court has jurisdiction over the parties and the subject matter of this action.
2) Plaintiff and Defendant agree to entry of this Order to settle and resolve all matters in this dispute arising from the conduct alleged in the Complaint to the date this Order is entered.
3) Defendant neither admits nor denies any allegations in the Complaint, except as specifically stated in this Order. For the purposes of this Order, Defendant admits the facts necessary to establish the Court’s jurisdiction over it and the subject matter of this action.
4) Between October 1, 2014 and at least June 30, 2017, Defendant has charged over 50,000 consumers over $20 million for credit repair services, and returned approximately $1.5 million of these fees to consumers through either refunds or chargebacks. Defendant caused harm in the amount of the total fees consumers paid, less any refunds they received. 5) Defendant waives all rights to seek judicial review or otherwise challenge or contest the validity of this Order. Defendant also waives any claim it may have under the Equal Access to Justice Act, 28 U.S.C. § 2412, concerning the Case 2:16-cv-07111-BRO-JEM Document 86 Filed 08/31/17 Page 2 of 14 Page ID #:1093
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prosecution of this action to the date of this Order. Each party will bear its own costs and expenses, including without limitation attorneys’ fees. 6) Entry of this Order is in the public interest. DEFINITIONS 7) The following definitions apply to this Order: a) “Affected Consumers” includes any consumer who paid fees to Defendant for Credit Repair Services from October 1, 2014 to the Effective Date of this Order.
b) “Credit Repair Services” means any good or service that is represented to remove derogatory information from, or improve, a person’s credit history, credit record, or credit rating. c) “Defendant” means Prime Marketing Holdings, L.L.C. (d.b.a. Park View Credit, National Credit Advisor, Credit Experts, and PMH Credit Repair) and its successors and assigns. d) “Effective Date” means the date on which this Order is entered on the docket by this Court.
e) “Enforcement Director” means the Assistant Director of the Office of Enforcement for the Consumer Financial Protection Bureau, or his/her delegate.
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f) “Related Consumer Action” means a private action by or on behalf of one or more consumers or an enforcement action by another governmental agency brought against Defendant based on substantially the same facts as described in this Order or the Complaint.
ORDER
IT IS ORDERED that:
I.
Conduct Prohibition 8) Defendant and its officers, agents, servants, attorneys, and employees who have actual notice of this Order, whether acting directly or indirectly, may not violate §§ 1031 and 1036 of the CFPA, 12 U.S.C. §§ 5531 and 5536, and the TSR, 16 C.F.R. pt. 310, in the provision of Credit Repair Services. 9) Defendant, whether acting directly or indirectly, is permanently restrained from:
a) Advertising, marketing, promoting, providing, offering for sale, selling, assisting in the sale of, or administering Credit Repair Services; or b) Receiving any remuneration or other consideration from, holding any ownership interest in, providing services to, or working in any capacity for any person engaged in or assisting in advertising, Case 2:16-cv-07111-BRO-JEM Document 86 Filed 08/31/17 Page 4 of 14 Page ID #:1095
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marketing, promoting, offering for sale, or selling Credit Repair Services.
II.
Customer Information 10) Defendant, and its officers, agents, servants, employees, and attorneys who receive actual notice of this Consent Order, whether acting directly or indirectly, may not disclose, use, or benefit from customer information, including the name, address, telephone number, email address, social security number, other identifying information, or any data that enables access to a customer’s account (including a credit card, bank account, or other financial account), that Defendant obtained before the Effective Date in connection with the offering or sale of credit repair services. However, customer information may be disclosed if requested by a government agency or required by law, regulation, or court order. III.
Civil Money Penalties 11) Under § 1055(c) of the CFPA, 12 U.S.C. § 5565(c), by reason of the alleged violations of law described in the Complaint, and taking into account the factors in 12 U.S.C. § 5565(c)(3), a judgment for a civil money penalty is entered in favor of the Bureau and against Defendant in the amount of $150,000. 12) Within 10 days of the Effective Date, Defendant must pay the civil money penalty by wire transfer to the Bureau or to the Bureau’s agent in compliance with the Bureau’s wiring instructions. Case 2:16-cv-07111-BRO-JEM Document 86 Filed 08/31/17 Page 5 of 14 Page ID #:1096
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13) The civil money penalty paid under this Order will be deposited in the Civil Penalty Fund of the Bureau as required by § 1017(d) of the CFPA, 12 U.S.C. § 5497(d).
14) Defendant must treat the civil money penalty paid under this Order as a penalty paid to the government for all purposes. Regardless of how the Bureau ultimately uses those funds, Defendant may not: a) Claim, assert, or apply for a tax deduction, tax credit, or any other tax benefit for any civil money penalty paid under this Order; or b) Seek or accept, directly or indirectly, reimbursement or indemnification from any source, including but not limited to payment made under any insurance policy, with regard to any civil money penalty paid under this Order.
15) To preserve the deterrent effect of the civil money penalty in any Related Consumer Action, Defendant may not argue that Defendant is entitled to, nor may Defendant benefit by, any offset or reduction of any compensatory monetary remedies imposed in the Related Consumer Action because of the civil money penalty paid in this action or because of any payment that the Bureau makes from the Civil Penalty Fund (“Penalty Offset”). If the court in any Related Consumer Action grants such a Penalty Offset, Defendant must, within 30 days after entry of a final order granting the Penalty Offset, notify the Bureau, and pay Case 2:16-cv-07111-BRO-JEM Document 86 Filed 08/31/17 Page 6 of 14 Page ID #:1097
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the amount of the Penalty Offset to the U.S. Treasury. Such a payment will not be considered an additional civil money penalty and will not change the amount of the civil money penalty imposed in this action.
IV.
Additional Monetary Provisions 16) In the event of any default on Defendant’s obligation to make payment under this Order, interest, computed under 28 U.S.C. § 1961, as amended, will accrue on any outstanding amounts not paid from the date of default to the date of payment, and will immediately become due and payable. 17) Defendant must relinquish all dominion, control, and title to the funds paid or to be paid under this Order to the fullest extent permitted by law and no part of the funds may be returned to Defendant.
18) Under 31 U.S.C. § 7701, Defendant must furnish to the Bureau its taxpayer identifying number, which may be used for purposes of collecting and reporting on any delinquent amount arising out of this Order. 19) Within 30 days of the entry of a final judgment, consent order, or settlement in a Related Consumer Action, Defendant must notify the Enforcement Director of the final judgment, consent order, or settlement in writing. That notification must indicate the amount of redress, if any, that Defendant paid or is required to pay to consumers and describe the consumers or classes of consumers to whom that redress has been or will be paid.
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V.
Reporting Requirements 20) Defendant must notify the Bureau of any development that may affect compliance obligations arising under this Order, including but not limited to, any change in its structure, including a dissolution, assignment, sale, merger, or other action that would result in the emergence of a successor company; the creation or dissolution of a subsidiary, parent, or affiliate that engages in any acts or practices subject to this Order; the filing of any bankruptcy or insolvency proceeding by or against Defendant; or a change in Defendant’s name or address. Defendant must provide this notice, if practicable, at least 30 days before the development, but in any case no later than 14 days after the development. 21) Within 7 days of the Effective Date, Defendant must: a) Designate at least one telephone number and email, physical, and postal address as points of contact, which the Bureau may use to communicate with Defendant;
b) Identify all businesses for which any Defendant is the owner, or that a Defendant directly or indirectly controls, by all of their names, telephone numbers, and physical, postal, email, and Internet addresses; and Case 2:16-cv-07111-BRO-JEM Document 86 Filed 08/31/17 Page 8 of 14 Page ID #:1099
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c) Describe the activities of each such business, including the products and services offered, and the means of advertising, marketing, and sales.
22) For 5 years from the Effective Date, Defendant must report any change in the information required to be submitted under ¶ 20 at least 30 days before the change or as soon as practicable after learning about the change, whichever is sooner.
23) Within 90 days of the Effective Date, and again one year after the Effective Date, Defendant must submit to the Enforcement Director an accurate written compliance progress report, which, at a minimum: a) Describes in detail the manner and form in which Defendant has complied with this Order; and b) Attaches a copy of each Order Acknowledgment obtained under § VI, unless previously submitted to the Bureau. VI.
Order Distribution and Acknowledgment 24) Within 30 days of the Effective Date, Defendant must deliver a copy of this Order to each of its board members and executive officers. 25) For 5 years from the Effective Date, Defendant must deliver a copy of this Order to any business entity resulting from any change in structure referred to Case 2:16-cv-07111-BRO-JEM Document 86 Filed 08/31/17 Page 9 of 14 Page ID #:1100
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in ¶ 20, and any future board members and executive officers before they assume their responsibilities.
26) Defendant must secure a signed and dated statement acknowledging receipt of a copy of this Order, ensuring that any electronic signatures comply with the requirements of the E-Sign Act, 15 U.S.C. § 7001 et seq., within 30 days of delivery, from all persons receiving a copy of this Order under this Section. VII.
Recordkeeping 27) Defendant must create or, if already created, must retain for at least 5 years from the Effective Date all documents and records necessary to demonstrate full compliance with each provision of this Order, including all submissions to the Bureau.
28) Defendant must retain the documents related to the compliance report described in ¶ 27 for at least 5 years.
29) Defendant must make the documents identified in ¶ 27 available to the Bureau upon the Bureau’s request.
VIII.
Notices 30) Unless otherwise directed in writing by the Bureau, Defendant must provide all submissions, requests, communications, or other documents relating to this Order in writing, with the subject line, “In re Prime Credit Consultants, Matter No. 2013-0946-02” and send them either:
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a) By overnight courier (not the U.S. Postal Service), as follows: Assistant Director for Enforcement Consumer Financial Protection Bureau ATTN: Office of Enforcement 1625 Eye St., N.W.
Washington, DC 20006 b) By first-class mail to the below address and contemporaneously by email to [email protected]: Assistant Director for Enforcement Consumer Financial Protection Bureau ATTN: Office of Enforcement 1700 G Street, N.W.
Washington, DC 20552 IX.
Cooperation with the Bureau 31) Defendant must cooperate fully to help the Bureau determine the identity and location of, and the amount of injury sustained by, each Affected Consumer. Defendant must provide such information in their or their agents’ possession or control within 14 days of receiving a written request from the Bureau.
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X.
Compliance Monitoring 32) Within 30 days of receipt of a written request from the Bureau, Defendant must submit compliance reports or other requested information, which must be made under penalty of perjury; provide sworn testimony; or produce documents.
33) Defendant must permit Bureau representatives to interview any employee or other person affiliated with Defendant who have agreed to such an interview regarding the subject matter or compliance of this Order. The person interviewed may have counsel present.
34) Nothing in this Order will limit the Bureau’s lawful use of civil investigative demands under 12 C.F.R. § 1080.6 or other compulsory process. XI.
Retention of Jurisdiction 35) The Court will retain jurisdiction of this matter for purposes of construction, modification, and enforcement of this Order. 36) Notwithstanding the provisions of ¶ 35, any time limits for performance fixed by this Order may be extended by mutual written agreement of the parties and without further Court approval. Additionally, details related to administration of §§ V through X of this Order may be modified by written agreement of the parties and without further Court approval. Any other Case 2:16-cv-07111-BRO-JEM Document 86 Filed 08/31/17 Page 12 of 14 Page ID #:1103
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modifications to this Order may be made only upon approval of the Court, upon motion by any party.
XII.
Administrative Provisions 37) The Bureau releases and discharges Defendant from all potential liability for law violations that the Bureau has or might have asserted based on the practices alleged in the Complaint, to the extent such practices occurred before the Effective Date and the Bureau knows about them as of the Effective Date. The Bureau may use the practices alleged in the Complaint in future enforcement actions against Defendant or its affiliates to establish a pattern or practice of violations or the continuation of a pattern or practice of violations or to calculate the amount of any penalty. This release does not preclude or affect any right of the Bureau to determine and ensure compliance with this Order, or to seek penalties for any violations of this Order.
38) Should Defendant seek to transfer or assign all or part of its operations that are subject to this Order, Defendant must, as a condition of sale, obtain the written agreement of the transferee or assignee to comply with all applicable provisions of this Order.
IT IS SO ORDERED.
Dated: August 31, 2017
______________________________ UNITED STATES DISTRICT JUDGE
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Consented and agreed to:
FOR THE CONSUMER FINANCIAL PROTECTION BUREAU:
Anthony Alexis Enforcement Director Deborah Morris Deputy Enforcement Director Carolyn Hahn Acting Assistant Litigation Deputy
/s/ Sarah Preis
Sarah Preis (Email: [email protected]) (Phone: 202-435-9318) Colin Reardon (Email: [email protected]) (Phone: 202-435-9668) Benjamin Clark (Email: [email protected]) (Phone: 202-435-7871) 1700 G Street NW Washington, DC 20552 Fax: (202) 435-7722
Attorneys for Plaintiff Consumer Financial Protection Bureau
FOR DEFENDANT:
_/s/ Steve Baghoomian ________ STEVE BAGHOOMIAN (Email: [email protected]) (Telephone: 818-281-3067) Law Office of Steve Baghoomian 1931 N. Buena Vista Street #104 Burbank, CA 91504
Attorney for Defendant Case 2:16-cv-07111-BRO-JEM Document 86 Filed 08/31/17 Page 14 of 14 Page ID #:1105