On March 18, the District Court for the Southern District of Texas entered an injunction against a credit repair organization, Turbo Solutions, Inc. d/b/a Alex Miller Credit Repair, and its owner Alex Miller for alleged violations of the FTC Act, Credit Repair Organizations Act (CROA), and the FTC’s Telemarketing Sales Rule (TSR). The complaint against Turbo Solutions and Miller alleged multiple violations, including making false promises regarding the company’s ability to improve consumer’s credit scores and unlawfully charging consumers upfront fees for these services.
On March 1, the U.S. Department of Justice, acting on behalf of the FTC, filed a complaint against Turbo Solutions and Miller, alleging that the company operated a deceptive credit repair scheme by claiming to help repair consumers’ credit, but failing to deliver on its promises. Specifically, the complaint alleged that the company’s advertisements and telemarketing practices made false representations about its ability to delete inaccurate and negative accounts from consumer’s credit reports, provide credit improvement results in 40 days, and boost consumer’s credit scores by 50-200 points in violation of the CROA and TSR. The complaint also alleged that the company filed or caused to be filed false identity theft reports through the FTC’s website. Finally, the complaint alleged that the company routinely collected advance fees of $1,500 in violation of the TSR’s prohibition on collecting payment for credit repair services prior to completion of the services, and the company failed to provide required disclosures to consumers regarding its services and cancellation policies.
In its order granting a permanent injunction, the District Court found that the United States had shown, and that the defendants had not contested, that the defendants had engaged in the alleged deceptive conduct. The court’s permanent injunction prohibits Turbo Solutions and Alex Miller from charging advanced fees, making certain promises and statements regarding their ability to improve consumers’ credit, filing identity theft reports on behalf of third parties, and failing to provide required disclosures in connection with credit repair services.
This case follows other enforcement measures taken by the FTC and CFPB against credit repair organizations that have allegedly made false representations regarding credit repair services. Prior articles covering some of these measures can be found here and here. Troutman Pepper will continue to monitor and report on these enforcement actions and other important issues related to the credit repair industry.