FTC Stops Sprawling Credit Repair Scheme that Scammed Consumers Out of Nearly $200 Million

At the request of the Federal Trade Commission, a federal court has temporarily halted a bogus credit repair scheme run by a sprawling network of 17 related companies and their principals.

The FTC's complaint alleges that, since at least 2016, Credit Glory, a network of 16 related entities and their five principals (Alexander Brola, Liam Emery, Marko Petkovic, Joshua Curtis and David Naylor), made false and misleading promises about their credit repair services, impersonated debt collection companies and creditors, collected illegal upfront fees and engaged in unlawful subscription enrollment practices. The operation scammed consumers out of nearly $200 million through unlawful up-front and recurring charges.

"Using paid Google search ads to target and deceive vulnerable consumers, including military servicemembers, through falsely promising to improve their credit is egregious behavior that will not be tolerated by the FTC," said Christopher Mufarrige, Director of the FTC's Bureau of Consumer Protection. "We are pleased that the court shut down this illegal operation. The FTC is committed to protecting consumers from credit repair schemes that require up-front fees and fail to deliver promised results."

The FTC's complaint notes that the defendants used paid search advertising to, in some instances, specifically target military servicemembers owing debts to military-related creditors, such as Army & Air Force Exchange Service and USAA, falsely promising to improve their credit by disputing those debts.

Specifically, the FTC alleges the defendants illegally:

• Made false promises about their credit repair services: Defendants promoted their credit repair services using Google search ads to induce consumers looking for information about debts owed to debt collection entities or creditors into contacting the defendants instead. In these search ads and on their websites, the defendants falsely claimed that their credit repair services will substantially improve consumers' credit scores by promising to remove negative items from consumers' credit reports.
• Deceptively impersonated debt collection entities and creditors: In numerous instances, when consumers contacted the defendants' telemarketers, their telemarketers tricked consumers into believing they were talking with legitimate debt collection entities or creditors and claimed that their credit repair services will substantially improve consumers' credit scores. Instead, the defendants disputed legitimate debts and, in some instances, filed false identity theft reports on Identitytheft.gov without consumers' knowledge in an attempt to improve their credit. But neither action improved consumers' credit scores.
• Charged illegal upfront fees: The defendants required consumers to pay illegal advance fees to enroll in the credit repair services. The operation's telemarketers typically stated that they needed to charge consumers a dollar, sometimes claiming it was needed to verify consumers' identities or to review consumers' credit reports. In addition, the defendants required another upfront fee, typically hundreds of dollars, before providing services.
• Engaged in unlawful enrollment practices: In addition to collecting illegal upfront fees, the defendants charged illegal advance fees on a recurring basis, often without consumers' express informed consent. The defendants charged consumers using a negative option and failed to clearly disclose recurring fees consumers will incur absent cancellation. The defendants' telemarketers often promised consumers they will only be charged for a few months, but consumers have reported that they have incurred charges indefinitely or until they affirmatively canceled. The defendants routinely denied refund requests.

The FTC alleges the defendants' actions violate the FTC Act, the Credit Repair Organizations Act, the Telemarketing Sales Rule, the Gramm-Leach-Bliley Act, the Restore Online Shoppers' Confidence Act and the Electronic Fund Transfer Act.

The defendants in this case are: Credit Glory LLC (separately incorporated in three different states), Credit Glory Inc., Credit Sage LLC, Joy Credit Software LLC, Clerk Credit Systems LLC, Clerk Credit Software LLC, Standard Scores LLC, Collection Payments LLC, Collections Dispute LLC, Collections Expert LLC, Collections Support LLC, Credit Cop LLC, Dispute Collection LLC, Glorious Credit LLC, and Joyful Credit LLC-as well as Brola, Emery, Marko Petkovic, Curtis and Naylor.

The Commission vote authorizing the staff to file the complaint was 2-0. The complaint was filed in the U.S. District Court for the District of Arizona.

NOTE: The Commission files a complaint when it has "reason to believe" that the named defendants are violating or are about to violate the law and it appears to the Commission that a proceeding is in the public interest. The case will be decided by the court.

The lead attorneys on this matter include Gregory A. Ashe and Benjamin Cady in the FTC's Bureau of Consumer Protection.