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Credit scores, bureaus & technology. Bankruptcty activity. Credit-related lawsuits, announcements and coverage of F a i r Isaac, E q u i f a x, E x p e r i a n, F I C O, V a n t a g e Score & T r a n s Union.


Credit Repair Firms Targeted by Regulators

FCC, states go after credit repair firms

Oct. 28, 2009

By SAM GARCIA


Federal and state regulators have been on a recent rampage filing lawsuits and taking actions against credit repair firms. The companies -- many located in Florida -- are accused of collecting huge up-front fees and promising services that are not delivered. Meanwhile, the implementation of a new rule will require disclosures about free credit reports.

Earlier this month, the Federal Trade Commission said it is seeking public comment about its proposal to amend the Free Annual File Disclosures Rule, which is also known as the "Free Credit Report Rule." The proposed amendments would implement a new law designed to prevent consumer confusion in free credit report advertisements and would address practices that could hamper a consumer's ability to obtain a free credit report from credit reporting agencies that are already required to provide such under federal law.

The FTC is required to issue a rule by Feb. 22, 2010, under the Credit CARD Act of 2009. Offers for free credit reports would need to prominently disclose that the offers are unrelated to federally mandated free credit reports.

On Friday, the FTC announced Operation Clean Sweep, a joint effort with 24 state agencies to crack down on 33 operations that deceptively claim they can remove negative credit information -- even when the negative items are accurately reported. The actions were taken as a result of thousands of complaints from consumers.

"Companies that promise they are able to scrub your credit reports of accurate, negative information for a fee are lying -- plain and simple," Lydia Parnes, director of the FTC's Bureau of Consumer Protection, said in the 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 seven firms were accused of violating the FTC Act, the Credit Repair Organizations Act and state laws by making false and misleading claims and by charging advance fees for credit repair services.

Among the companies charged were Florida-based Nationwide Credit Services Inc., which allegedly charged advance fees of between $75 and $150 and total fees of between $300 and $1,000 that were debited monthly from bank accounts. Nationwide allegedly did no work for the customers and denied refund requests. Another Florida firm, Clean Credit Report Services Inc., faced similar accusations but collected $400 in advance fees.

RCA Credit Services LLC, also based in Florida, allegedly promised to raise credit scores above 700 in as little as 30 days and remove all negative credit for a cost of between $500 and $3,000 with a portion paid in advance. But RCA often did nothing. It also violated the CROA by failing to provide a written statement of Consumer Credit File Rights Under State and Federal Law before contracts were signed, by not conspicuously noting in their contracts that consumers have a three-day right of rescission and for failing to provide a written notice-of-cancellation form.

Latrese & Kevin Enterprises Inc., which also operates as Hargrave & Associates Financial Solutions, charged around $250 per person to erase bad credit. The Florida firm is also charged with violating the FTC Act by falsely claiming consumers will receive a credit card with a credit line as high as $10,000 after paying an advance fee of as much as $300.

The Florida firms of ACE Group Inc. -- which also does business as American Credit Experts Inc., The Ace Group Inc., The Ace Group and ACE -- and Legal Credit Repair Center Inc., also known as LCRC, promised 60-day results for advance fees of around $50 plus $59.95 a month. But their method was to repeatedly send dispute requests even after the bureaus have verified that the entries were accurate.

California-based Successful Credit Service Corp., which also does business as Success Credit Services, claimed it had special relationships with creditors, collection companies, credit bureaus and public record providers, according to the agency. Customers were charged advanced fees of between $3,000 and $4,000. Successful agreed to an $8.3 million settlement with the FTC a few weeks ago.

Over in Illinois, Advantage Credit Repair LLC advertised that it didn't charge large up-front fees, though it did require as much as $269 in advance, and promised a refund after 60 days if there were no results, though it rarely gave refunds.

Earlier in the month, Texas-based Lee Harrison Credit Restoration, which also operated as Credit Restoration and Lee Harrison Associates Credit Restoration, agreed to a $2.5 million FTC settlement.

New Jersey's Office of the Attorney General and its Division of Consumer Affairs obtained a final consent judgment against United Credit Adjusters, Bankruptcy Masters Corp., United Counseling Association, Inc., and Credit Bureau Controls Corp. The defendants were ordered to pay $500,000 in civil penalties and $86,918 in reimbursement to the state. In addition, two officers of the companies were ordered to pay $15,022 in restitution to 17 consumers.

All of the defendants were banned from credit-related businesses. The state claims that the defendants charged up-front fees but failed to deliver the promised services, including raising credit scores and removing negative entries.



Federal Trade Commission v. Nationwide Credit Services, Inc., a Florida corporation and James R. Dooley, individually and as president of Nationwide Credit Services, Inc.
Civil Action No. 3:08-CV-1000-J-25TEM, FTC File No. 082 3219 (U.S. District Court Middle District of Florida).

Federal Trade Commission v. Clean Credit Report Services, Inc., Ricardo A Miranda, Daniel R. Miranda, and Ruthy Villabona.
Civil Action No. 1:08-cv-22922-AJ,
FTC File No. 082 3220 (US. District Court for the Southern District of Florida Miami Division).

Federal Trade Commission v. Successful Credit Service Corporation, a California corporation also dba Success Credit Services and Tracy Ballard aka Tracy Ballard-Straughn, individually and as an officer and/or director of Successful Credit Service.
Civil Action No. 2:08-cv-06829-ODW-SH,
FTC File No. 082 3223 (U.S. District Court for the Central District of California Western Division).

Federal Trade Commission v. Advantage Credit Repair LLC and Mark D. Solomon.
Civil Action No. 1:08-CV-05994, FTC File No. 082 3223 (U.S. District Court for the Northern District of Illinois Eastern Division).

Federal Trade Commission v. RCA Credit Services, LLC, a Florida corporation, Rick Lee Crosby, Jr., individually, and as an officer or manager of Defendant, and Brady Wellington, individually, and as an officer or manager of Defendant.
Civil Action No. 8:08-CV-2062-T-27MAP, FTC File No. 082 3148 (U.S. District Court Middle District of Florida).

Federal Trade Commission v. Latrese & Kevin Enterprises Inc., a Florida Corporation, also doing business as Hargrave & Associates Financial Solutions, Latrese Hargrave, also known as Latrese V. Williams, individually and as an officer of Latrese & Kevin Enterprises, and Kevin Hargrave, Sr., individually and as an officer of Latrese & Kevin Enterprises Inc.
Civil Action No. 3:08-CV-1001-J-34JRK, FTC File No. 082 3007 (U.S. District Court Middle District of Florida Jacksonville Division)

Federal Trade Commission v. Ace Group, Inc. a Delaware corporation, also d/b/a American Credit Experts, Inc., The Ace Group, Inc., The Ace Group, and Ace, Legal Credit Repair Center, Inc., a Florida Corporation, also d/b/a LCRC, Michael Singer, Melvin Kessler, and Gerald Roth.
Civil Action No. 0:08-CV-61686-PAS, FTC File No. 082 3172 (U.S. District Court Southern District of Florida)

Federal Trade Commission v. Successful Credit Service Corporation, a California corporation also dba Success Credit Services and Tracy Ballard aka Tracy Ballard-Straughn, individually and as an officer and/or director of Successful Credit Service.
Civil Action No. 2:08-cv-06829-ODW-SH, FTC File No. 082 3233
(U.S. District Court for the Central District of California Western Division)

FTC. v. Rudolph Joseph Strobel a/k/a Lee Harrison, individually and doing business as Lee Harrison Credit Restoration, Credit Restoration, and Lee Harrison Associates Credit Restoration, and Leanna Ruth Harrison, individually and doing business as Lee Harrison Credit Restoration, Credit Restoration, and Lee Harrison Associates Credit Restoration.
FTC File No. 082 3141 (U.S. District Court for the Eastern District of Texas)

Anne Milgram, Attorney General of the State of New Jersey, and David M. Szuchman, Director of the New Jersey Division of Consumer Affairs, Plaintiffs, v. United Credit Adjusters Inc., Bankruptcy Masters Corp., United Counseling Association Inc., Credit Bureau Controls Corp., Ahron E. Henoch, individually, and Ezra Rishty, individually, and Jane and John Does 1-10, individually and as owners, officers, directors, shareholders, founders, managers, agents, servants, employees, representatives and/or independent contractors of United Credit Adjusters Inc., Bankruptcy Masters Corp., United Counseling Association Inc., Credit Bureau Controls Corp. and XYZ Corporations 1-10, Defendants.
Docket No. Mon-C-158-08 (Superior Court of New Jersey, Chancery Division, Monmouth County)


Sam Garcia worked in mortgage lending for twenty years prior to becoming publisher of MortgageDaily.com in 2000.

e-mail:
[email protected]


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