|Seven credit repair companies have been charged for promising to remove legitimately reported delinquency.
The firms allegedly violated the FTC Act and the Credit Repair Organizations Act, according to a complaint filed last month by the Federal Trade Commission in U.S. District Court for the District of New Jersey. The alleged activities were uncovered through undercover tape recordings.
The FTC claims that the companies charged advance fees of between $300 and $2,000 to remove negative items from credit reports -- including items that were accurate and current.
But the offerings were scams, the FTC said in a statement.
One firm promoted ads that reportedly read, "100% Guarantee to raise your credit score!"
Scripts for telephone calls allegedly stated, "I can't tell you much because I'll be giving you my trade secrets, but I can definitely guarantee that we'll take care of anything that's derogatory on her credit report. It's all legal."
But consumers were often not given what they were promised. Refunds were frequently avoided by fine print in the contracts that required cancellations to occur three days after the verbal agreement -- even though federal law requires three days from the written agreement date.
The promotions, which have been running since at least October 2005, led to charges of violating the FTC Act.
"Through these advertisements, defendants lure desperate consumers who have poor credit reports and credit scores with promises of guaranteed credit repair," the complaint says.
Advance fees, missing written contracts and inadequate disclosures were the basis for the charges of violating the Credit Repair Organizations Act.
The defendants are:
- United Credit Adjusters Inc., d/b/a United Credit Adjustors and UCA;
- United Counseling Association Inc., d/b/a UCA;
- Bankruptcy Masters Corp.;
- National Bankruptcy Services Corp.;
- Federal Debt Solutions Ltd.;
- United Money Tree Inc.; and
- Ahron E. Henoch, Ezra Rishty, and Gerald Serino, also known as Jerry Serino
In February 2006, the FTC announced Project Credit Despair, a joint effort with the U.S. Postal Inspection Service and eight state law enforcement agencies. In that operation, 20 credit repair firms were also accused of claiming they could remove negative but accurate information from consumers' credit reports.
Federal Trade Commission v. United Credit Adjusters, Inc., a New Jersey corporation, also d/b/a United Credit Adjustors, and UCA, United Credit Adjustors, Inc., a New Jersey corporation, also d/b/a United Credit Adjusters, and UCA, United Counseling Association, Inc., a New Jersey corporation, also d/b/a UCA, Bankruptcy Masters Corp., a New Jersey corporation, National Bankruptcy Services Corp., a New Jersey corporation, Federal Debt Solutions LTD., a New Jersey corporation, United Money Tree, Inc., a New Jersey corporation, Ahron E. Henoch, also d/b/a United Credit Adjusters, Inc., Bankruptcy Masters Corp., and Federal Debt Solutions Ltd., individually and as an officer or director of United Credit Adjusters, Inc., United Creditors, Inc., United Counseling Association, Inc., Bankruptcy Masters Corp., National Bankruptcy Services Corp., Federal Debt Solutions Ltd., and United Money Tree, Inc., Ezra Rishty, also d/b/a United Credit Adjusters, Inc., and Bankruptcy Masters Corp., individually and as an officer or director of United Credit Adjusters, Inc., and Bankruptcy Masters Corp., and Gerald Serino, a/k/a Jerry Serino, also d/b/a United Credit Adjusters, Inc., individually and as an officer or director of United Credit Adjusters, Inc.
FTC File No. 082 3211, Feb. 24, 2009 (U.S. District Court District of New Jersey)