The Federal Trade Commission, U.S. Postal Inspection Service and eight state law enforcement agencies have taken action against 20 operations that allegedly deceptively claim they can remove negative information from consumers’ credit reports – even if that information is accurate and timely.
The FTC began coordinating “Project Credit Despair” last year in response to thousands of consumer complaints, which it shared with the USPIS, the State of Louisiana Office of Financial Institutions, and other state law enforcement agencies
According to the FTC, Bad Credit B Gone, LLC and its principal, Joseph A. Graziola III, made promises such as “the credit you always dreamed of!” and “If we fail to remove any negative credit from your reports, we’ll give you a refund plus $100.” Referring to “charge-offs, collections, tax liens, bankruptcies, repossessions, student loans, child support, late payments, and judgments,” they claimed, “On average, 80 percent of the derogatory information is deleted off your credit report within . . . three months.” The Philadelphia-based company charged $500 per individual and $700 per couple for its services, half of which was due up-front.
The FTC charged the company with violating the FTC Act by making false or misleading statements, such as claiming they can improve most consumers’ credit reports substantially and permanently by removing negative but accurate information. The defendants also allegedly violated the Credit Repair Organizations Act (CROA) by requiring advance payment for credit repair services and by making false or misleading statements, said the FTC.
The FTC is seeking to bar them permanently from further violations, to require them to return money to consumers.
In another action involving credit repair, the FTC asked a federal court issue a contempt citation against Cornerstone Wealth Corp., Dallas and its principal, John Atchley, Jr for alleged violations of a previous court order.
The Office of the Attorneys General in Tennessee, Ohio, California, Arkansas, Illinois, Florida and Kentucky as well as the Louisiana Office of Financial Institutions also took law enforcement actions against allegedly fraudulent credit repair companies, said the FTC.
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