A federal court has ordered a credit repair operation and its principals to stop making false claims and requiring advance payment for credit repair services. The agreed-upon court orders are a result of a settlement between the Federal Trade Commission and the “credit repair†defendants.
The Commission sued the “credit repair” defendants as part of “Operation Clean Sweep,†a crackdown on credit repair operations. The defendants represented that they could remove negative but accurate information from consumers’ credit reports, including bankruptcies and late fees. According to the FTC, the defendants charged consumers up to $59.95 initially, then $59.95 per month, to send letters to credit reporting agencies disputing information on the consumers’ credit reports. Contrary to the defendants’ representations to consumers, those dispute letters failed to remove accurate negative information from the consumers’ credit reports.
The orders bar the defendants from violating the Credit Repair Organizations Act by charging clients fees in advance and claiming that a credit repair organization can permanently remove negative information from credit reports, even when the information is accurate. They also bar the defendants from making deceptive claims when marketing any product or service, including credit repair services.
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