Credit Repair Scam caught by Project Credit Despair

As I mentioned before on my other posting, there is a big business in credit repair but the majority of these credit repair companies claiming to do wonders don’t have true facts to stand on. The true fact is that they cannot legally change or delete accurate and true negative or derogatory information from your credit report.

Another true fact is that negative or derogatory information could be deleted legally from the credit report, but you don’t need to pay $500 or $700, you can do it all for free.

According to this article, the FTC, the U.S. Postal Inspection Service (USPIS) and eight state law enforcement agencies announced (Feb 2nd 2006) the crackdown on 20 operations of business deceptively claiming they could remove negative information from credit reports, even if that information was accurate and timely.

In response to thousands of consumer complaints, the FTC began “Project Credit Despair”. The complaints presented involved companies throughout the nation typically charging hundreds of dollars upfront and promising the removal of any and all negative and derogatory information.

One company mentioned in this investigation was “Bad Credit B Gone, LLC” and its principal Joseph A. Graziola III which made claims such as “the credit you always dreamed of” “If we fail to remove any negative credit from your reports, we’ll give you a refund plus $100” (ohh.. how nice of them to be willing to give money back as a guarantee, don’t you think?), negative credit referring to “charge-off, collections, tax liens, bankruptcies, repossessions, student loans, child support, late payments and judgments.” They also claimed to remove derogatory information within three months. This company normally charged fees from $500 to $700 up-front.

According to the FTC, Bad Credit B Gone violated the FTC Act and the Credit Repair Organization Act by making false or misleading claims about credit repair and for requiring up-font payment for such services.

Other companies investigated for credit repair scams are listed here (need a PDF reader)

The FTC advices the consumers

Avoid ANY company that requires up-front fees for credit repair services. It’s 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 advices you NOT to contact a credit reporting agency directly
Avoid ANY credit repair company that advices you to dispute ALL of the information in your credit repair
Avoid ANY company that suggests creating a “new” credit identity

Follow the steps outlined on my previous posting about what you can do as a consumer to repair your credit at no cost.

If you need to file a complaint with the FTC about a credit repair company that charged you go to the FTC website or call 1-877-FTC-HELP (382-4357)

Comments

2 Responses to “Credit Repair Scam caught by Project Credit Despair”

SCAMS/FRAUD in today’s real estate and mortgage industry : My Home is My Investment on September 18th, 2007 1:08 PM

[...] I’ve encountered are consumers paying up to $500 dollars or more to so called “credit repair companies” and received either a temporary fix where their credit score was brought up temporarily or [...]
A Homeowner’s guide: Short Sales and preventing Foreclosure Pt2 (Alternatives to selling) : San Jose-Santa Clara County Real Estate UNCENSORED on September 4th, 2008 9:59 AM

[...] my previous post, the first thing you should do is (*if you have enough time*) repair your credit (beware of credit repair companies) before you refinance and calculate if you have built enough equity to benefit from the refinance. [...]

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