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October 28, 2008

FTC and State Agencies Target 36 'Credit Repair' Operations

By Tim Gray, TMCnet Web Editor


The Federal Trade Commission (FTC (News - Alert)) has cracked down on 33 operations that deceptively claim they can remove negative information from consumers' credit reports, even if that information is accurate and timely, according to the agency.

 
In a joint operation with 24 state agencies the Commission moved to stop the allegedly unlawful business practices, and force the companies to repay customers through a sting called “Operation Clean Sweep”.
 
“Companies that promise they are able to scrub your credit reports of accurate, negative information for a fee are lying - plain and simple,” said Lydia Parnes, director of the FTC's Bureau of Consumer Protection, in a statement. “Under federal law, accurate, negative information can be reported for up to seven years, and some bankruptcies can be reported for up to 10 years.”
 
The Commission has charged seven operations with violating the FTC Act and the Credit Repair Organizations Act (CROA) by “making false and misleading statements, such as claiming they can substantially improve consumers' credit reports by removing accurate, negative information from their credit reports.”
 
In addition, the agency alleged the defendants violated the CROA by charging an advance fee for credit repair services. The 26 state actions include alleged violations of state laws and the CROA.
 
Complaints were filed against Nationwide Credit Services, Clean Credit Reporter Services, Successful Credit Services Corporations, Advantage Credit Repair, RCA Credit Services, Hargrave & Associates Financial Solutions, and The Ace Group.
 
The FTC recommends consumers take the following precautions when dealing with credit repair companies:
  • Avoid any credit repair company that will not tell you your legal rights and what you can do, yourself, for free.
  • Avoid any credit repair company that tells you not to contact a credit reporting company directly.
  • Avoid any credit repair company that advises you to dispute all of the information in your credit report.
  • Avoid any company that suggests creating a 'new' credit identity - and then, a new credit report - by applying for an Employer Identification Number to use instead of your Social Security number. That is against the law. If you follow illegal advice and commit fraud, you also may be subject to prosecution.

Tim Gray is a Web Editor for TMCnet, covering news in the IP communications, call center and customer relationship management industries. To read more of Tim’s articles, please visit his columnist page.

Edited by Tim Gray


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