Consumer Law

Credit Repair Firms Sued By FTC

By M. Stan Herring

Credit reports are so important that there is the temptation to want to remove all negative information. We help consumers dispute false negative information but not correct negative information. Unfortunately, there are many credit repair firms that charge money to remove correct negative accounts.

According to this FTC release last month, many of these firms have been targeted by the FTC for breaking the law. Read the entire release but here is the first part:

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.

Remember, pull your credit reports, review them, then dispute any false information, and finally sue if the false information is not corrected. Please feel free to contact us if you live in Alabama and have questions about your credit reports.

Full post as published by Alabama Consumer Blog on November 02, 2008 (boomark / email).