Antitrust Law Daily Wrap Up, CONSUMER PROTECTION—D. Ariz.: FTC's TRO in alleged $172.5 million credit repair scam converted to preliminary injunction, (Sep 9, 2026)

By Kenneth H. Ryesky, M.B.A., J.D.

"The evidence surrounding the policies and procedures that were supposed to be in place is less compelling than Plaintiff's extensive evidence of the deceptive practices that allegedly occurred in reality."

A federal district court judge in Phoenix, Arizona has converted a temporary restraining order into a preliminary injunction in a case of the FTC suing a complex enterprise of purported credit repair services that were allegedly operated in violation of the law. The court found that its preliminary injunction would apply to all who had notice of it, including certain individual defendants who had not as yet been served with process. The court found that there was a great likelihood of the FTC's success on the merits of the case, and that the balance of the equities favored extension of the receivership and asset freeze aspects of the TRO would forestall the harm the FTC intended to ultimately halt (FTC v. Credit Glory LLC, No. 2:26-cv-05387-SPL (D. Ariz. Sep. 4, 2026)).

Background. Following investigation of several consumer complaints, the FTC had reason to believe that 17 entities and five individuals who operated or otherwise controlled those entities were engaged in a coordinated common enterprise of deceptive practices purporting to repair consumers' deficient credit ratings. The enterprise especially targeted enlisted military personnel and their families. The alleged scheme entailed (1) using Google ads as bait to attract consumers who sought to contact debt collectors; and (2) deceptively using Google and other Internet advertising to attract consumers who sought to improve their credit scores. Once the consumers contacted a member of the enterprise, the enterprise would engage in various practices prohibited by the federal debt collection laws and other federal statutes, including filing false identity theft reports without the consumers' consent or knowledge. The FTC estimated that the enterprise stole nearly $200 million from consumers.

The FTC filed a complaint in federal district court against the entities and individuals on August 3, 2026, alleging violations of the FTC Act, the Credit Repair Organizations Act (CRO), the Gramm-Leach-Bliley Act (GLB), the Restore Online Shoppers’ Confidence Act (ROSCA), and the Electronic Fund Transfer Act (EFTA), along with violations of regulations issued pursuant to such statutes.

The next day, the court imposed a Temporary Restraining Order that entailed the appointment of a receiver and an asset freeze. The court held a hearing on the FTC's motion for a preliminary injunction on September 3, 2026. The court issued the requested preliminary injunction the next day, September 3, 2026.

Preliminary injunction-personal jurisdiction. The court found that the individuals who had not been served with the complaint would be bound by the preliminary injunction it issued. Counsel for defendants had filed a notice of appearance on behalf of all the individual defendants. One of the individual defendants had not been served until he personally appeared in court to testify at the preliminary injunction hearing, thereby leaving two who had not been officially served and who did not participate in the response to the FTC's motion for the preliminary injunction. One of those two (Emery) resided outside of the United States.

The judge ruled that it was not necessary for the court to have personal jurisdiction over the defendants in order for the defendants to be bound by the preliminary injunction. The individual defendants all had notice of the FTC's complaint (although not necessarily through official service of the papers), and it was highly likely the court would have jurisdiction over them in the near future, given the FTC Act's broad investigation and subpoena powers [15 U.S.C. § 49]. The court thus found that "there is sufficient notice and a likelihood that the Court will have personal jurisdiction over all Defendants, such that it may issue a preliminary injunction as to all Defendants."

Preliminary injunction-success on the merits. The court determined that the FTC had shown a likelihood of success on the merits of its case. It was shown that the enterprise had collected advance fees, before completing its promised work, in violation of the CRO Act [15 U.S.C. § 1679b(b)] and the Telemarketing Sales Rule (TSR) [16 C.F.R. § 310.4(a)(2)]. The court found that analyzing the Constitutionality of the FTC's rule, as questioned by the defendants, was not appropriate for this stage of litigation when urgency takes precedence over merits.

In addition to the $1.00 fee collected for receiving the credit report, the enterprise also charged "set-up fees" ranging from $199 to more than $900. Although the credit report was promptly provided, "the set-up fees" were collected before the paperwork was sent to the consumers; this was an improper advance fee within the meaning of the CRO Act and the TSR.

There also was evidence of deceptive and misleading practices by the enterprise. These included false promises to resolve the debt and no substantial improvement on the consumers' credit scores. The false or misleading practices also included websites to lure consumers with false promises, and impersonation by enterprise operatives of real debt collectors.

The Case is No. 2:26-cv-05387-SPL.

Judge: Logan, S.

Attorneys: Benjamin Cady for the FTC. Chad S. Hummel (Faegre Drinker Biddle & Reath LLP) for Credit Glory LLC.

Companies: Credit Glory LLC

Cases: ConsumerProtection FederalTradeCommissionNews ArizonaNews