The Consumer Financial Protection Bureau (CFPB) and Commonwealth of Massachusetts Attorney General Maura Healey jointly filed a lawsuit against a credit repair Boston MA company, Commonwealth Equity Group, LLC, which does business as Key Credit Repair, and Nikitas Tsoukales (aka Nikitas Tsoukalis), Key Credit Repair’s president and owner. From the CFPB’s May 22, 2020 press release:
As alleged in the complaint, from 2016 through 2019 alone, Key Credit Repair enrolled nearly 40,000 consumers nationwide, and since 2011, it collected at least $23 million in fees from consumers. The Bureau alleges that in their telemarketing of credit-repair services, the defendants violated the Consumer Financial Protection Act’s (CFPA) prohibition against deceptive acts or practices and the Telemarketing Sales Rule’s (TSR) prohibitions on deceptive and abusive telemarketing acts or practices.
Read the entire CFPB press release here. The complaint filed in the United States District Court for the District of Massachusetts is available here.
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Credit Repair Boston MA Company Latest Target Of CFPB
This is the latest example of how serious the federal government and state attorneys general offices are in enforcing the Telemarketing Sales Rule (TSR) and other laws and regulations covering the credit repair industry. My article linked above caused an uproar of shock and concern throughout the credit repair industry. Owners of companies doing credit repair Boston MA and throughout the country were astonished and bewildered when I revealed they were all in violation of a federal regulation, the TSR (which has the force of law).
The TSR And Credit Repair Co. Payments
The Telemarketing Sales Rule states that a credit repair company cannot receive any payment from a client until all the work (which can take six months or longer) has been fully completed and the credit repair company has waited an additional six months and then obtained a new credit report showing the client all the deletions and improvements. Obviously no credit repair service could survive with such cash flow restrictions legally required by the TSR.
Credit Repair Industry Caught With Pants Down
After my article broke, credit repair business owners and others in the industry were scrabbling in Facebook groups, social media and Zoom calls to make sense of what I had revealed. Could this really be true?, they wondered. How could they be so uninformed and unprepared for such a predicament?
Well they should have known. The Federal Trade Commission promulgated the Telemarketing Sales Rule in 1995. It was subsequently amended in 2003, 2008 and 2010. Make no mistake about it, government authorities have aggressively enforced the TSR against credit repair companies beginning in 1996, with Operation Payback (4 FTC cases and 16 state actions). There are countless TSR enforcement actions, cases and examples against credit repair companies from 1996 to the present day.
With this history of TSR enforcement actions along with the CFPB’s recent lawsuit against credit repair Boston MA company, Key Credit Repair there is no excuse for a member of the credit repair industry not to know that federal and state authorities, especially the Consumer Financial Protection Bureau, are dead serious about making sure credit repair companies comply with the TSR. Some credit repair organization owners may have been familiar with parts of these federal laws and regulations but few really grasped the danger they face while operating a credit repair business. The penalties, fines and sanctions for violating the TSR are severe.
I Thought I Was Compliant
Almost without exception credit repair company owners believe they are compliant with all laws and regulations. I’m sure Key Credit Repair owner, Nikitas Tsoukales felt the same. I’m sure he thought he did everything right. He joined NACSO, passed their exams for ethics and compliance. He trained his staff on proper procedures. He thought he wasn’t charging upfront. Nikitas Tsoukales has been in business for over 12 years. For 3 years he didn’t have a single customer complaint. He only received about 38 total BBB complaints (out of more than 40,000 customers) in 12 years and he resolved every one of them. His BBB Rating is A as of today. However he did not comply with the TSR.
Don’t Poke The Bear
Tsoukales also criticized the Consumer Financial Protection Bureau in his personal Twitter account.
Perhaps it was not wise to poke the bear.
NACSO, the credit repair organizations trade group Tsoukales and his credit repair Boston MA company Key Credit Repair belonged to has recently filed a lawsuit against the CFPB. We will cover that and what it entails for the credit repair industry next.
