The FTC Snares Credit 'Repair' Scammers
The Federal Trade Commission, U.S. Postal Inspection Service (USPIS), and eight state law enforcement agencies targeted 20 credit repair businesses. Project Credit Despair started last year in response to thousands of consumer complaints to the agencies.The 20 cases involve companies throughout the nation that promise to remove accurate and timely information from consumers' credit reports, which legally cannot be done, according to the FTC. Typically, these businesses charged hundreds of dollars in advance for the so-called service.
"These credit repair schemes are a big problem for consumers," says Eileen Harrington, deputy director of the FTC's Bureau of Consumer Protection. "Credit repair promoters generally charge hundreds of dollars, but don't deliver on their claims. The fact is, they can't. No one can legally remove accurate and timely information from your credit report."
One company, Bad Credit B Gone (BCBG), and its principal, Joseph Graziola III, made promises like "If we fail to remove any negative credit from your reports, we'll give you a refund plus $100," the FTC says. BCBG claims that "On average, 80 percent of the derogatory information is deleted off your credit report within...three months." Possible removable items include things like bankruptcies, child support, collections, late payments, liens, repossessions, and student loans. The company charged $500 per individual and $700 per couple, half of which was due in advance, for its services.
The FTC announced Thursday that a temporary injunction has been issued BCBG. The Commission is seeking to permanently bar BCBG from continuing these operations and to require it to return money to consumers. BCBG also allegedly violated the Credit Repair Organizations Act by requiring advance payment for credit repair services and by making false or misleading statements.
"The big theme of this announcement from the consumer perspective is that people should know that there is no reason to pay for credit repair ever," Harrington says. "Despite their claims, there is nothing that any credit repair firm can do for you for a fee that you cannot do for yourself at little or no cost. It's about consumers making informed decisions before they invest money."
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