The federal Consumer Financial Protection Bureau and the Massachusetts Attorney General's office have sued Nikitas Tsoukales and his Key Credit Repair of Mattapan over what they say are failed promises to repair people's credit, deceptive marketing and repeated violations of a state law that prohibits taking somebody's money before actually fixing their credit.
Key Credit Repair shares a former fast-food restaurant at 686 Morton St. with Regal Cafe, a 24-hour pizza delivery service that Tsoukales's family owns, next door to the B-3 police station.
In their suit, filed in US District Court in Boston on Friday, the federal bureau and the state AG's office allege Key Credit Repair charged consumers $99.95 to $159.95 in upfront fees and then similar monthly fees for alleged credit-repair services even before the company actually tried to repair their credit ratings, in violation of both federal and state consumer-protection laws - and contrary to federal telemarketing rules - which say companies can only collect fees after providing consumers proof that their credit ratings have, in fact, been improved.
Also, the company failed to comply with a state law requiring such companies to provide an initial invoice showing the total cost of the company's services or to provide Massachusetts consumers with information about how to seek a refund should they be dissatisfied with the services.
KCR also engaged in deceptive marketing through a promise on its Web site to "fix unlimited negative items" on consumers' credit records or increase their credit scores by an average of 90 points within 90 days" when in many cases it did no such thing.
Also, the lawsuit charges, the company does not have a "team of more than 60 credit experts" as promised and most consultations were not "done by our owner, Nik Tsoukales, and his team of certified credit consultants.” In fact, the agencies allege:
KCR, however, has just a handful of Boston-based employees, only some of whom interact directly with consumers. The majority of KCR’s sales and client interactions are conducted by contract telemarketers located in Central America who are compensated almost entirely by commission, based on the number of clients they enroll in KCR’s programs.
In sum, they concluded:
KCR's representations have led consumers to believe that if they paid for KCR's services, the company would help improve their credit scores or remove derogatory information from their credit reports.
In many instances, however, KCR failed to deliver the promised results, and consumers did not see their credit scores improved or negative items removed from their credit reports.
The bureau and the AG's office ask a judge to order KCR to knock it off and to pay back an amount large enough to pay back affected consumers, who could total in the tens of thousands; they say the company enrolled some 40,000 consumers nationwide between 2016 and 2019 and 12,616 Massachusetts consumers between 2011 and 2019. The company brought in at least $23 million in fees between 2011 and 2019, they say. The agencies also ask the judge to consider fines and other penalties.
Because the suit was filed Friday, Tsoukales has not yet had a chance to reply.