The CFPB announced that it has entered into a proposed settlement with several of the defendants in the lawsuit it filed in January 2020 in a California federal district court that alleges the defendants obtained consumer reports unlawfully, charged unlawful advance fees, and engaged in deceptive conduct.

The defendants included Chou Team Realty, LLC, which does business as Monster Loans (Monster Loans), and Thomas Chou and Sean Cowell (the “Settling Defendants”).  The individual Settling Defendants both allegedly exercised substantial managerial responsibility for and control over Monster Loans’ business practices at the time of the alleged violations.  In its complaint, the Bureau alleges that Monster Loans and a sham company, obtained consumer reports in the form of prescreened lists on the pretense that they planned to use the reports to offer mortgage loans to consumers when, in fact, they provided the reports to other defendant companies not participating in the settlement that used the reports to market student loan debt relief services.

The Bureau claims that  (1) the Settling Defendants violated the FCRA by using or obtaining consumer reports without a permissible purpose to market student loan debt relief services, (2) Monster Loans substantially assisted the non-settling debt relief defendant companies in violating the Telemarketing Sales Rule (TSR) and the Consumer Financial Protection Act (CFPA), and (3) the individual Settling Defendants invested in the non-settling debt relief defendant companies and received profits from such companies.  (The basis for the Bureau’s TSR and CFPA claims included allegations that the debt relief defendant companies misrepresented their services and unlawfully collected advance fees for debt relief services.)

The proposed stipulated judgment includes the following monetary provisions:

  • An $18 million judgment is entered against Monster Loans for the purpose of providing consumer redress to consumers charged fees by the debt relief defendant companies.
  • Of this judgment, Settling Defendant Chou is jointly and severally liable for $403,750 and Settling Defendant Cowell is jointly and severally liable for $406,150.
  • Upon payment of $200,000 by Monster Loans and $403,750 by Chou, the remainder of the judgment is suspended.
  • Monster Loans must pay a $1 civil money penalty, Chou must pay a $350,000 penalty, and Cowell must pay a $100,000 penalty.  (The $1 penalty is based on Monster Loans’ “limited ability to pay as attested in its financial statements.”)

The proposed settlement also provides that the Settling Defendants are permanently banned from (1) using or obtaining  prescreened consumer reports for any purpose, (2) using or obtaining consumer reports for any business purposes other than underwriting or otherwise evaluating mortgage loans, and (3) offering or providing debt relief services or assisting others, or receiving any remuneration or other consideration from, the offering or providing of such services.

The Bureau’s press release about the proposed settlement indicates that its claims against the other defendants remain pending in the court.