I was sued by the CFPB

I was sued by the CFPB, and today I’m going to reveal everything you need to know about the lawsuit, big changes for the credit repair industry, and the crucial steps you must take to keep your credit repair business compliant and safe. I’m also going to give you a TSR Compliance checklist to help you with ensuring compliance.

Now before I get further into this, understand that I and Credit Repair Cloud are not attorneys and we are not providing legal advice. Please don’t take anything I am saying here as legal advice and consult an attorney if you have any questions.

Ok, here’s what happened…

3 years ago, in 2021, the CFPB, which is the Consumer Financial Protection Bureau sued me and Credit Repair Cloud over something called the TSR which stands for the Telemarketing Sales Rule.

We don’t telemarket, we don’t have any sales people, and our software doesn’t dial. But they alleged that we broke TSR and CFPA rules by providing CRC tools and services to users who violated the law.

Getting sued was really scary. It’s been the most stressful time of my life.

But now 3 years later, in 2024, I can now share that we finally have closure and have agreed to a settlement with the CFPB.

I haven't been allowed to talk about any of this publicly for this whole time. So this means that I finally get to share some really important info and updates with you, and most importantly, I wanna help you. I want to share some really important tips to help you stay compliant and avoid potential issues in your business.

What is the Telemarketing Sales Rule (TSR)?

The Telemarketing Sales Rule was created to protect consumers with clear guidelines and restrictions for telemarketing. By understanding and following the TSR, your credit repair business will stay compliant, run smoothly, and avoid potential trouble.

Here is the most important thing to understand about the TSR.

Under the TSR, it’s illegal to telemarket credit repair services and then charge advance fees.

What does that mean? Let me break down that legaleze for you….

Telemarketing means any phone calls or video conferencing with any consumers before the sale of services.
Advance Fees are ANY fees charged before 6 months after the completion of services and proof of results.

So, if you telemarket and then charge advance fees, you may be running an illegal business under the TSR.

BUT, if you DO NOT telemarket, you may be able to charge typical fees for credit repair services as permitted by law.

I want to be really clear here - the TSR prohibits any kind of call or encouragement to call including:

Initiating telephone calls or hiring others to call potential customers.
Running ads that feature a number to call for more information.
Emailing or mailing a letter that encourages recipients to call to learn more about your credit repair service.
Or hiring someone to engage in telemarketing for you.
It even prohibits having any kind of consultation or credit audit made over a call or video conference that leads to the sale of credit repair.

I will note that if you wait until 6 months after the credit repair work is done and you can prove the score did increase, you are allowed to speak to leads on the phone. The trouble is that’s not feasible for most businesses and it’s very difficult to prove the increase since you can’t easily pull a consumer's score 6 months after your work is finished.

So the best solution is to not telemarket. And I will give you some recommendations on how to do that later in this video.

What happens if I do not comply with the TSR?

Recently the CFPB has stepped up their enforcement of the TSR across the entire Credit Repair Industry. You may have seen headlines with other big names being sued as well.

So here’s what this means; If you are doing credit repair, you MUST be TSR compliant. The TSR applies industry-wide, to every single credit repair organization. No matter how many clients you have, no matter what software you use.

I’m really proud that Credit Repair Cloud will be the first of its kind to be fully TSR compliant. These are big changes but as the industry leaders in credit repair software, I know just how important they are and I wanna help you every step of the way.

What actions do I need to take to ensure compliance with the TSR?

The big thing is that you can't sell or talk to leads or sell your services over the phone or on Zoom calls.

Now, there are two really important things I want you to take action on today

Remove All Phone Numbers - do not have a phone number on your website or in any of your marketing.
Don’t have any calls to action on your site or ads or emails that drive a potential customer to a phone call or a video conference.
Don’t Do Phone Sales - don’t make any sales calls or speak to any consumer on a call or video conference until they are a paying client with a signed agreement. And no, paying for a credit audit does not count as becoming a paying client. A credit audit leads to the sale of credit repair services, so that cannot happen over a call.

So how do you run a business this way? You instead switch to self-service checkout which I will explain later in this video.

These changes are crucial to ensure compliance and avoid penalties.

I know this is a lot of information so I’ve created a helpful checklist for you to use. It clearly shows what you can and can’t do to stay TSR compliant. You can download the checklist for free at creditrepaircloud.com/tsr.

We’ll also be providing more and more training materials, resources and answering questions.

I wasn’t supposed to say anything yet… but we’re also building really cool features and tools into Credit Repair Cloud to help you stay compliant, while still growing your business. They don’t know I was going to say that but I just couldn’t keep quiet any longer!

Remember, my team and I are here to help but ultimately, being compliant is your responsibility.

You need to take this stuff seriously. The CFPB is demanding compliance, and they will go after smaller and smaller CROs and credit repair software providers and anyone and everyone associated with the credit repair industry.

So what can you do?

Well, here’s where things get exciting because there are ways to grow your business while remaining compliant, and - as the industry leader - Credit Repair Cloud is here to help you.

First, it’s very important that you remove your phone number from your website, as well as any calendar scheduling, or any “Call Me” booking forms you may have. Anything that would lead to a phone call, you need to get rid of it.

But here are two things you definitely SHOULD do!

1. Automate your sales process with “self-service sign up”.

This means that leads can sign up and pay for your credit repair services right on your site without speaking to anyone over the phone or on video conference.

Build up your self-service website. Have a web form that signs people up as clients rather than giving them a phone number to call. You can even use the “sign-up only” template form from Credit Repair Cloud. It’s really easy to just copy the code and paste it into your website! And by using that, which works with CRC Billing, you can have self service signup on your website today. You can also have a video above it explaining your services and how to checkout.

And then once that person has actually become a client, then you can talk with them by phone or video conference as much as you like. That’s fine, you can even have an onboarding call with them, because they’re now a client.

Here’s the good news: By using a self service sign up on your website, you can make money while you sleep, selling on autopilot. This saves you time and money.

2. Use other methods to communicate with prospects before receiving payment and a signed contract.

The good news is this gives you a great opportunity to sell in other ways.

Focus your efforts on your social media content and direct messaging, email, chatbots, video on your site and text chat. You can even meet prospects in person to carry out consultations and credit audits.

Make that as great as you can. Offer to answer questions and provide value, even if it’s free. Show your potential clients that you know what you’re talking about and you can help them with their credit issues.

If you want more tips and resources about how to automate your sales process and connect with leads without phone calls, check out the tips I provide in the free TRS compliance checklist!

You’ll also want to make sure you’re using a TSR Compliant Business Model.

Here’s an example of one that is NOT compliant…

A lead that receives a free consultation over the phone or video conference who then signs up for your services.

That’s a no-no! Instead, follow these guidelines to help stay compliant.

A lead goes to your website and completes a self-service sign up online, they pick a plan, provide payment details and sign an agreement. It’s okay to offer chat or email support during that process, you can even have a video on the page guiding them, but you cannot pick up the phone or do zoom! However, once the lead submits their payment information online and officially become your client, then you can talk with them on the phone as much as you like. You can even have an onboarding call to kick off your service.

Working this way, you won’t be looking over your shoulder, worrying if you’re going to get sued or shut down by the CFPB.

And the good news is: You don’t have to do phone sales. Many successful companies have self service sign-ups. It just takes a mind shift.

Here's my final point...

It is really important that you adhere to the TSR to ensure compliance.

These are really big changes for everyone in the industry. Take a minute to make sure you really understand them and then take action to ensure you’re compliant. Then focus on all the other awesome and time-saving ways you can grow your business and change more lives.

So again, to make this as easy as possible for you. Download the free checklist that I’ve created to easily keep track of Do’s and Don’ts. Get your copy at creditrepaircloud.com/tsr.

So take care, Credit Hero!

And keep changing lives!