Attorney General Chris Carr announced yesterday that Burlington Financial Group, LLC, Katherine Burnham, Sang Yi and Richard Burnham (Burlington) have entered into a plea agreement with the State of Georgia and the Consumer Financial Protection Bureau (CFPB) to resolve allegations that it has violated the Telemarketing Sales Rule, the Fair Business Practices Act (FBPA) and the Debt Adjustment Act in connection with the marketing, sales and provision of debt relief and credit repair services.
“Illegal debt adjustment practices exploit consumers who are already vulnerable, such as older or at-risk adults, by damaging their creditworthiness and exposing them to legal repercussions,” Attorney General Chris Carr said. “We will not tolerate this unfair behavior in Georgia.”
The Attorney General and the CFPB allege that Burlington targeted financially vulnerable consumers — many of whom were elderly — through telemarketing requests in which they falsely promised that his services would eliminate credit card debt and improve their credit scores. Burlington reportedly collected thousands of dollars in advances for its “debt validation program,” but ultimately misled consumers about the results the program would yield, often leaving customers in higher debt, reduced credit scores and, in some cases, exposing creditors to lawsuits and bankruptcy. .
The company has been sending monthly email requests to Georgian consumers since at least 2015 to encourage them to purchase services from the “Credit Card Relief Program,” which it advertised would lead to savings in credit card balances. The complaint alleges that those letters contain multiple deceptive statements that misrepresent the company’s name and location, and fabricate a debt “savings” for consumers without any factual basis.
The complaint further alleges that Burlington violated each of the three key provisions of Georgia’s Debt Adjustment Act. Debt adjustment companies are not legally allowed to charge Georgian consumers more than: 7.5 percent of the amount that the consumer pays monthly to the debt rescheduling company for payment to his or her creditors. Georgian law also requires all funds that accept debt adjustment companies from consumers (minus the allowable fees described above) must are provided to the consumer’s creditors within 30 days of receipt from the consumer. Burlington, however, is said to have paid none of the money raised to consumer creditors. Debt adjustment companies must also maintain a separate trust account for customer funds and specific insurance coverage to protect consumers. Copies of these audits and insurance policies must be filed annually with the Attorney General’s Department of Consumer Protection. Burlington also allegedly failed to comply with these provisions.
Finally, Burlington claimed that it offers and provides “credit repair” services to consumers. Credit recovery services are prohibited by law in Georgia.
The consent decree requires Burlington to permanently cease doing business in the state of Georgia and pay $150,000 in civil fines to the CFPB, $15,000 of which goes to the state of Georgia. Affected consumers will receive a refund through the Consumer Restitution Fund of the CFPB. However, if the court determines that Burlington has not disclosed any tangible assets or that any of its financial statements contain material misrepresentations or omissions, Burlington will be required to pay $30 million in consumer restitution and $8.1 million in civil fines to the state. Georgia.