3 Risk Mitigation Lessons from the CFPB’s Credit Repair Software Company Suit

On September 20, 2021, the CFPB issued a press release announcing it filed suit against a California-based software company, Credit Repair Cloud (Cloud), and its owner, Daniel Rosen, for allegedly assisting illegal credit repair businesses.

The CFPB alleges that Cloud and Mr. Rosen violated the Telemarketing Sale Rule (TSR) and the Consumer Financial Protection Act of 2010 (CFPA) by providing substantial assistance, including training, materials, and software to credit-repair companies that use telemarketing to reach consumers and charge unlawful advance fees.

Notably, most of the allegations from the CFPB’s complaint came from publicly available resources: Cloud’s website, Mr. Rosen’s podcast, and a Facebook page on which Mr. Rosen provides advice and frequently comments. If the allegations are true, the CFPB’s complaint indicates Cloud is no typical software company, nor is Mr. Rosen a typical software company owner. Instead, the allegations suggest that Cloud and Mr. Rosen actively trained and encouraged their clients to violate consumer protection laws.