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‘Operation Clean Sweep’: FTC and State Agencies Target 36 ‘Credit Repair’ Operations

‘Operation Clean Sweep’: FTC and State Agencies Target 36 ‘Credit Repair’ Operations

October 23, 2008

The Federal Trade Commission and 24 state agencies today announced a crackdown on 33 operations that deceptively claim they can remove negative information from consumers’ credit reports, even if that information is accurate and timely. In the seven FTC actions announced today the Commission seeks to halt the defendants’ allegedly unlawful business practices, prohibit further violations, and make them pay consumer redress and give up their ill-gotten gains. In addition, the FTC announced three related credit repair cases earlier this year.

‘Companies that promise they are able to scrub your credit reports of accurate, negative information for a fee are lying – plain and simple,’ said Lydia Parnes, Director of the FTC’s Bureau of Consumer Protection. ‘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.’

In response to thousands of complaints from consumers throughout the nation, the FTC launched ‘Operation Clean Sweep’ with 24 state agencies in 22 states. In the cases announced today, the Commission charged seven operations with violating the FTC Act and the Credit Repair Organizations Act (CROA) by making false and misleading statements, such as claiming they can substantially improve consumers’ credit reports by removing accurate, negative information from their credit reports. The agency also alleged that the defendants violated the CROA by charging an advance fee for credit repair services. The 26 state actions include alleged violations of state laws and the CROA.

According to complaints filed by the FTC:

Nationwide Credit Services, Inc. and James R. Dooley, based in Florida, advertise their credit repair services on ehappyhour.com and in the Yellow Pages, stating, for example, that bankruptcies, judgments, slow pay history, repossessions, and collection accounts ‘CAN BE LEGALLY ERASED!’ The defendants charge from $300 to $1,000, including an advance fee ranging from $75 to $150, and a monthly fee that they often debit from consumers’ bank accounts. After paying the fees, consumers find that the defendants rarely, if ever, deliver the promised results. In many instances, they take consumers’ money without providing any services. Consumers often find their cancellation requests ignored, and their refund requests are almost always denied.

The Commission vote to authorize staff to file the complaint was 4-0. The complaint was filed in the U.S. District Court for the Middle District of Florida.

Clean Credit Report Services, Inc., Ricardo A. Miranda, Daniel R. Miranda, and Ruthy Villabona, based in Florida, advertise on radio, television, and ccrstoday.com, which has testimonials, such as one purportedly from an Atlanta woman, stating, ‘. . . When I lost my job and simply didn’t pay my credit cards and when I needed to get my car loan they said I needed at least a 600 credit score but I had a 480. I got into the CCRS club and did what they told me to do . . . When I pulled my report online I realized that I had a 621. I couldn’t believe this really works.’ Consumers who responded to the defendants’ ads on syndicated radio talk shows were told that the defendants would help remove all the negative remarks that appear on their credit, and that even current debt could be removed.

Once consumers pay $400 in advance for services, the defendants often debit the money from their bank accounts before receiving a signed contract, and then do little, if anything, to fulfill their promises. When consumers reach them to complain, they’re told a variety of excuses, and those who persist are sometimes hung up on, put on hold, or ignored.

The Commission vote to authorize staff to file the complaint was 4-0. The complaint was filed in the U.S. District Court for the Southern District of Florida, Miami Division. The FTC thanks the Better Business Bureau of Southeast Florida for its invaluable assistance.

Successful Credit Service Corporation, also doing business as Success Credit Services, and Tracy Ballard, also known as Tracy Ballard-Straughn, based in California, promote their credit repair services primarily through appearances at seminars offering real estate investment or other business opportunities. They also promote themselves via audio podcasts on third-party Web sites and through their Web sites, successcreditservices.com and successfulcreditservices.org. They claim to have special relationships ‘with every creditor, collection company, public records provider and credit bureaus,’ and that because of this, they can perform ‘hard’ or permanent deletions of all kinds of derogatory information from consumer’s credit reports. Consumers typically must pay advance fees ranging from $3,000 to $4,000 per person.

The Commission vote to authorize staff to file the complaint was 4-0. The complaint was filed in the U.S. District Court for the Central District of California, Western Division. The FTC thanks the California Attorney General’s office for its invaluable assistance.

Advantage Credit Repair LLC and Mark D. Solomon, based in Illinois, advertise on myadvantagecredit.com and Yellow Pages ads, stating, ‘We would never charge a large fee up front, or make you wait a long period of time to refund your money if we do not get results. You WILL see results in 60 days, or your money will be refunded in full . . .’ The defendants charge $495 per person and $665 for a couple, and they require $219 or $269, respectively, in advance. Refund requests are almost always denied.

The Commission vote to authorize staff to file the complaint was 4-0. The complaint was filed in the U.S. District Court for the Northern District of Illinois, Eastern Division

RCA Credit Services, LLC, Rick Lee Crosby, Jr., and Brady Wellington, based in Florida, advertise on RCACredit.com and RCAcreditservices.com. Their ads state, ‘Boost Your Credit Score Into The 700s’ in as little as 30 days’ and claim that RCA can remove ‘ANY or ALL Negative Accounts From Your Credit Report.’ They state that a credit expert will ‘coach you on ways to remove negative remarks and unpaid debts from your credit report while adding new positive reporting accounts to your credit file.’ The defendants charge from $500 to more than $3,000, and they require at least partial payment in advance of providing any services. In many instances, the defendants allegedly provided consumers no services at all.

These defendants are also charged with violating the CROA by failing to provide, before contracts are signed, a written statement of ‘Consumer Credit File Rights Under State and Federal Law;’ failing to include in their consumer contracts conspicuous statements about consumers’ right to cancel without penalty or obligation within three business days; and failing to provide a written ‘Notice of Cancellation’ form.

The Commission vote to authorize staff to file the complaint was 4-0. The complaint was filed in the U.S. District Court for the Middle District of Florida.

Latrese & Kevin Enterprises, Inc., also d/b/a Hargrave & Associates Financial Solutions, Latrese Hargrave, also known as Latrese V. Williams, and Kevin Hargrave, Sr., based in Florida, advertise on hargraveandassociates.com and helpmycreditnow.com, and on radio stations with rhythm & blues, hip-hop, and gospel formats. They charge $250 to $270 per person and $450 per couple, half or all of which they require in advance. In a radio script, the defendants state, ‘They specialize in erasing bad credit! Hargrave & Associates covers all three major credit bureaus, slow pays, charge-offs, repossessions can be erased for two-hundred, fifty dollars.’

Also, on hargravecard.com and in radio ads, the defendants offer an advance-fee credit card, for $100 to $300, claiming that applicants will be approved for a guaranteed credit limit ranging from $500 to $10,000. These defendants are also charged with violating the Telemarketing Sales Rule by requesting or receiving a fee in advance of consumers obtaining a credit card when the defendants have guaranteed or represented a high likelihood of success in obtaining or arranging for the acquisition of a credit card. In addition, they are charged with violating the FTC Act by falsely representing that consumers will receive a credit card after paying a fee.

The Commission vote to authorize staff to file the complaint was 4-0. The complaint was filed in the U.S. District Court for the Middle District of Florida.

ACE Group, Inc., also d/b/a as American Credit Experts, Inc., The Ace Group, Inc., The Ace Group, and ACE; Legal Credit Repair Center, Inc., also d/b/a LCRC, Michael Singer, Melvin Kessler, and Gerald Roth, based in Florida, advertise on aceintake.com, foryourcredit.com, helpformycredit.com, helpmycredit.com, and pop-up Internet ads. One ad states, ‘ . . . ACE has developed a methodology which starts to show results in as little as 60 days.’ In telephone calls responding to the ads, FTC investigators posing as consumers were told, ‘. . . everything surrounding your bankruptcy will be removed from your credit report . . .’ and late payments ‘are easy to remove.’

The defendants typically charge $39.95 to $59.95 initially, then $59.95 per month for their promised services, which they indicate may take up to six to eight months. They send the major credit reporting agencies repeated dispute letters on consumers’ behalf, with vague statements about each disputed debt or bankruptcy record, but with no further explanation or documentation. The defendants dispute items repeatedly, even after the credit bureaus have verified them.

The Commission vote to authorize staff to file the complaint was 4-0. The complaint was filed in the U.S. District Court for the Southern District of Florida.

Operation Clean Sweep also includes three FTC cases announced earlier this year: Home Buyers Consulting Network, Inc., Payneless Credit Repair, LLC, and Lee Harrison Credit Restoration (see press releases dated May 22, July 17, and September 10).

State law enforcement efforts involved the attorney general offices in Arkansas, California, Colorado, Florida, Illinois, Louisiana, Maine, Mississippi, Missouri, New Jersey, New Mexico, Ohio, Pennsylvania, Rhode Island, South Dakota, Tennessee, and West Virginia; the justice departments of North Carolina, Oregon, and Wisconsin; Idaho’s Department of Finance; Louisiana’s Office of Financial Institutions; Vermont’s Department of Banking, Insurance, Securities & Health Care Administration; and Wisconsin’s Department of Financial Institutions.

The FTC appreciates the participation of every state agency involved in this effort.

Advice for Consumers
How can you avoid turning credit repair into credit despair? Here are a few suggestions:

  • Avoid any company that wants you to pay for credit repair services before they provide any services. It is against the law.

  • Avoid any credit repair company that will not tell you your legal rights and what you can do, yourself, for free.
  • Avoid any credit repair company that tells you not to contact a credit reporting company directly.
  • Avoid any credit repair company that advises you to dispute all of the information in your credit report.
  • Avoid any company that suggests creating a ‘new’ credit identity – and then, a new credit report – by applying for an Employer Identification Number to use instead of your Social Security number. That is against the law. If you follow illegal advice and commit fraud, you also may be subject to prosecution.

FTC Press Release

‘Credit Repair’ Operation Settles with FTC; Company Made False Claims and Charged Illegal Up-Front Fees

06/25/2009

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 defendants in October 2008 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.

The orders further prohibit the defendants from collecting money from consumers who purchased their services before December 3, 2008, when the court halted their unlawful practices, and from disclosing or benefitting from customers’ personally identifiable or financial information. The orders require them to take reasonable measures to protect consumers’ personally identifiable information during its disposal.

The order against Ace Group, Inc., doing business as American Credit Experts, Inc., The Ace Group, Inc., The Ace Group, and ACE; Legal Credit Repair Center, Inc.; Michael Singer, and Gerald Roth, imposes a $20,645,754 judgment that will be suspended if Singer and Roth pay $5,000 each because of their inability to pay the full judgment. The order against Melvin Kessler also imposes a $20,645,754 judgment, which is suspended based on his inability to pay. If the defendants are found to have misrepresented their financial condition, the full judgments will become due immediately. The orders also contain record-keeping and reporting provisions to allow the FTC to monitor compliance with the orders.

The FTC advises that only time, effort, and a personal debt repayment plan can improve your credit report. The first step is to learn what information is in your credit report. Federal law requires that the nationwide consumer reporting companies – Equifax, Experian, and TransUnion – provide you with a free copy of your credit report once every 12 months, if you ask for it. To order your free report, visit annualcreditreport.com, call 1-877-322-8228, or complete and mail the Annual Credit Report Request Form. If you find errors or mistakes in your credit report, federal law gives you the right to have them corrected – free of charge. Credit repair information is available in “Credit Repair: How to Help Yourself,” at www.ftc.gov/bcp/edu/pubs/consumer/credit/cre13.shtm.

FTC Press Release

Complaint
Stipulation Order
Stipulated Final Judgement
Stipulated Final Judgement (2)
Corrected Stipulated Final Judgement

'Operation Clean Sweep': FTC and State Agencies Target 36 'Credit Repair' Operations by

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