Credit repair firms that claim they can remove accurate but negative information from a borrower's credit report are the focus of a crackdown by regulatory and law enforcement agencies.
Project Credit Despair, announced today by the Federal Trade Commission, the U.S. Postal Inspection Services and eight state law enforcement agencies, will involve the pursuit of "20 operations that deceptively claim they can remove negative information from consumers' credit reports -- even if that information is accurate and timely."
The project was reportedly prompted by thousands of complaints from consumers last year.
Bad Credit B Gone LLC and its principal, Joseph A. Graziola III, charged prospective borrowers $500 and promised that they would receive a $100 refund if "we fail to remove any negative credit from your reports," the government's announcement said.
"We have two goals with this announcement," the statement said. "One is very specific. It is to stop Bad Credit B Gone's deceptive practices, and force them to return their ill-gotten gains to consumers. The other is broad. It is to put other credit repair firms on notice that we are on the beat, and it is to alert consumers that there is absolutely no reason to pay for credit repair -- ever."
The FTC said it asked the court to issue a contempt citation to Dallas-based Cornerstone Wealth Corp. for alleged violations of a previous court order.
"Credit repair promoters generally charge hundreds of dollars, but don't deliver on their claims," said FTC Deputy Director Eileen Harrington in the statement. "The fact is, they can't. No one can legally remove accurate and timely information from your credit report."
Among the states participating in the project are Arkansas, California, Florida, Kentucky, Illinois, Louisiana, Ohio and Tennessee.
"Only time, a conscious effort, and a personal debt repayment plan can improve" credit reports, the FTC said.