ATLANTA (CBS46)–According to Attorney General Chris Carr, Burlington Financial Group, LLC, Katherine Burnham, Sang Yi, and Richard Burnham (Burlington) entered a consent judgment to resolve allegations that they violated the Telemarketing Sales Rule, the Fair Business Practices Act (FBPA), and the Debt Adjustment Act in connection with the marketing, sale, and provision of debt relief and credit repair services.
State and federal officials said the group targeted financially vulnerable consumers—many of whom were elderly—through telemarketing solicitations. The solicitations, officials said, falsely promised that the companies’ services would eliminate credit card debts and improve consumer’s credit scores.
The company–which sent out solicitations since at least 2015–collected hundreds of thousands of dollars in advance fees and mislead consumers about the results the program would produce.
Some customers were left with increased debt and impaired credit scores, officials said. In some cases, consumers were exposed to lawsuits and bankruptcy.
The alleged fraud started with the company sending out monthly mail solicitation to induce Georgians to purchase its “Credit Card Relief Program”. The advertisements had multiple deceptive statements misrepresenting the company’s name and location. Also, officials reported advertisements fabricated debt savings for the consumer.
According to a spokesperson with the state attorney general’s office, Burlington violated three major provisions of Georgia’s Debt Adjustment Act.
Under Georgia law, debt adjustment companies cannot charge Georgia consumers more than 7.5 percent of the amount the consumer deposits with the debt adjustment company each month.
Georgia law also requires that all funds, minus fees, must go to the consumer’s creditors within 30 days of receipt from the consumer. Burlington, however, failed to distribute any of the money it collected to consumers’ 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 Consumer Protection Division. Burlington allegedly failed to comply with these provisions as well.
“Illegal debt adjustment practices exploit consumers who are already vulnerable, like older or at-risk adults, by hurting their credit and exposing them to legal consequences,” said Attorney General Chris Carr. “We will not tolerate this unfair conduct in Georgia.”
The Consent Judgment requires Burlington to permanently cease doing business in Georgia and to pay $150,000 in civil penalties to the CFPB, $15,000 of which will go to the state.
Additionally, impacted consumers will receive restitution through the CFPB’s Consumer Restitution Fund. However, if the court determines that Burlington failed to disclose any material asset or that any of the financial statements contain any material misrepresentation or omission, Burlington will be required to pay $30 million in consumer restitution and $8.1 million in civil penalties to Georgia.