The credit reporting industry has strongly encouraged greater federal and state enforcement of laws against credit repair organizations that violate federal and state consumer protection laws. We are glad to see that the CFPB has announced a
proposed order in federal district court against Burlington Financial Group and its owners and executives, Richard Burnham, Katherine Burnham, and Sang Yi, for allegedly deceiving consumers into hiring the company to lower or eliminate credit-card debts and improve consumers’ credit scores.
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The CFPB also alleges that Burlington Financial Group violated the TSR and CFPA by telling customers that it could restore their credit scores and that it had a “credit restoration team.” The CFPB’s investigation found that these claims are false or unsubstantiated. For example, the company did not obtain its customers’ original credit scores prior to enrollment into their program – nor did the company track its customers credit scores during or after disenrolling from its program. In contrast to the company’s marketing materials, the CFPB found that many of its customers showed their actual credit scores worsened as a result of using the company’s services.
A key impediment for credit bureaus in servicing consumers comes from credit clinic demands on the bureaus. The nationwide credit bureaus report that somewhere between one-third to one-half of all disputes filed with credit bureaus are from credit clinics. These credit clinics are encouraging consumers to pay them to have accurate but adverse information removed from credit reports. Forcing credit bureaus to respond to credit clinic disputes the same way they must respond to legitimate disputes detracts from a credit bureau’s ability to devote the full weight of its consumer assistance resources to consumers who have legitimate disputes and need real help.
We hope to see more actions like this from the FTC, the CFPB, and state attorneys general.