In another victory for the CFPB and its burgeoning, but still limited, takedowns of credit repair outfits, the CFPB announced that it will divide more than $22m to “6,523 people who were misled by Burlington Financial Group with false promises that it would eliminate their credit-card debts and improve their credit scores will receive a check in the mail.” The company “was a Maryland-based debt-relief and credit-repair company that marketed and sold debt-relief and credit-repair services to people nationwide from January 2016 until at least September 2019 and collected fees from them until at least August 2020.”
In a press release, the Bureau added that
In 2021, the federal district court entered a stipulated final judgment and order against Burlington Financial Group and its owners and executives, Richard Burnham, Katherine Burnham, and Sang Yi, for deceiving consumers into hiring the company with false promises to lower or eliminate their credit-card debts and to improve their credit scores.
Burlington Financial Group violated consumer financial protection law through deceptive marketing and operating practices. The company advertised to potential customers, through direct mailers and third-party lead generators, that its so-called “debt validation” program used a legally vetted process to eliminate debt.
The CFPB’s investigation found that the company failed to produce any evidence showing that it had invalidated, eliminated, or lowered any of its customers’ debts. Additionally, Burlington Financial Group told customers that it could restore their credit scores, but the CFPB’s investigation found that these claims were false or unsubstantiated.
Interested parties can go to the CFPB website to learn more about the case and redress payments.
While federal and state crackdowns on fraudulent credit repair are less frequent than they should be, the CFPB’s enforcement of these operations is becoming more noticeable. As reported recently in Law 360, “the CFPB has asked U.S. District Judge Bruce Jenkins to order Lexington Law, Progrexion Marketing Inc. and other related parties to pay a total of $3.1 billion in consumer restitution and combined civil penalties of more than $52.8 million for charging what he ruled last month were unlawful fees.” In an April 2023 filing this week, the firms asked the judge “to narrow the agency’s request to at most a $7.8 million fine.” As reported, if the judge grants the Bureau’s request, which includes “injunctive” provisions restricting certain fee practices, would represent the largest ever obtained by the CFPB in a contested enforcement action.”
Eric J. Ellman is Senior Vice President for Public Policy and Legal Affairs at the Consumer Data Industry Association (CDIA) in Washington, DC. He also served for eight months as Interim President and CEO of the Association. More