International Law

Credit Repair Fraud

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From the FTC Press Release on Credit Repair Fraud:

The Federal Trade Commission charged two credit repair marketers with violating federal law by collecting advance payment for credit repair services and falsely promising to remove derogatory information from consumers' credit reports - even if the information is accurate and not obsolete.

At the Commission's request, a federal court halted the defendants' allegedly unlawful business practices and froze their assets pending further litigation.

The FTC seeks to bar the defendants from further violations and make them forfeit their ill-gotten gains.

According to the FTC's complaint, the defendants marketed their "services" to consumers throughout the nation via an Internet Web site, www.lhcreditrepair.com, classified ads in USA Today, Thrifty Nickel, Common Cents, and www.americanclassifieds.com, and online listings such as www.kellysearch.com and www.aboutus.org.

Statements on their Web site include, "Have you had a bankruptcy? We will repair your credit so that this past event does not haunt your future."

Consumers who called the defendants in response to their ads were told, "Anything that hurts you, we're going to get it off of [your credit report]."

The complaint states that the defendants often led consumers to believe that accurate information on their credit reports might somehow be considered inaccurate and subject to removal.

Even when consumers told them that the information was accurate, the defendants led consumers to believe that it could be removed. The defendants allegedly claimed they had special knowledge and expertise that enabled them to permanently remove negative information, including late payments, charge-offs, collections, tax liens, repossessions, foreclosures, bankruptcies, and judgments, even when the information was accurate and not outdated.

According to the complaint, the defendants offer four levels of service ranging from $250 to $1,150 per person.

They require an advance fee they call a deposit, which varies in amount, depending upon the program selected. On their Web site's home page they claim, without qualification, that "[a]fter we have cleared your files we will stay with you for life, at no additional charge, to catch any other bad files that might show up."

Subsequent Web pages indicate, however, that only one of the four service levels includes the "for life" feature.

Full post as published by Misleading Advertising Law on September 10, 2008 (boomark / email).