FTC Cracks Down on 33 Credit Repair Companies
Last week the FTC announced an effort to shut down 33 credit repair operations with the assistance of 24 state agencies. According to the FTC Release:
“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.”
Many consumers faced with overwhelming debt often consider the credit score consequences of the various debt settlement strategies available to them. If already behind on payments, you may have even looked into possible credit repair solutions.
Debt settlement, in many cases, involves the diversion of your monthly payments into a separate settlement account. It is difficult to avoid the negative impact of late payments, charge offs, and collections that result from this strategy, however, you do have options.
The FTC’s release can be misleading to those not intimately familiar with the credit repair industry.
First, accurate information is removed from credit reports all the time. The Fair Credit Reporting Act prevents creditors and the credit bureaus from reporting inaccurate information but does not require that accurate information be reported. It is not uncommon for consumers to negotiate a favorable payment status from a creditor or the deletion of a collection from a collection agency when making good on outstanding debts.
It is also clear, from the FTC’s release, that the primary issue with the companies being targeted has very little to do with credit repair. Rather, these companies are guilty of poor business practices. In almost every instance, the company being targeted took their client’s money, provided little or no service, and then refused to honor any refund requests. It was for those reasons that consumers complained to the FTC - triggering the “crackdown”.
Engaging the services of a reputable credit repair organization that can counsel you on how to enhance your credit score after going through a tough economic time is a wise move. Alternatively, there are plenty of free resources that you can utilize to educate yourself and make substantial improvements on your own.
About the Author:
Chris Rocks is the Founder and Executive Director of the Credit Advisory Alliance (CAA), a membership based organization helping those who have suffered a financial crisis restore their credit and reinsert themselves back into the credit-driven economy. Prior to founding CAA, Chris had successfully helped consumers achieve their financial goals as both a Financial Advisor and the Vice President of a Mortgage Origination Firm.
Post written by Chris Rocks
4 Responses to “FTC Cracks Down on 33 Credit Repair Companies”
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Chris Rocks is the Regional Director of the National Credit Federation (NCF). NCF is a nationwide membership-based organization that assists consumers recovering from a financial difficulty and those who need a significant increase in their credit score.
Chris began his financial services career as a Financial Advisor helping young families with risk management and asset accumulation strategies. It was during that time that Chris realized that many of these young families also needed someone to guide their choices with regards to debt management.
He made the transition into the mortgage industry where he first worked as a loan originator and later the Vice President of a small mortgage company. As Chris came across clients who had suffered through financial challenges and saw the difficulty they had in re-entering our credit driven economy, he discovered there was a real opportunity to leverage his unique background and help others.
He can be contacted by visiting his personal site, GoodCreditLiving.com.
Francine L. Huff is the Publisher and Editorial Director of Super Savvy Publishing, LLC, which provides editorial and publishing services. She is a gifted author, freelance journalist, and motivational speaker who has entertained and motivated a variety of audiences through workshops, panels and keynote addresses. Francine is the author of The 25-Day Money Makeover for Women, which has inspired and motivated many readers to reign in poor financial habits, become good stewards over their money and work toward a debt-free life. She has appeared on a variety of TV and radio shows. Francine previously worked for the Wall Street Journal, where she was the spot news bureau chief, a news editor and a copy editor. She has interviewed a variety of financial professionals about financial issues and strives to present information about managing money in an easy-to-understand format that is accessible to people of all backgrounds and income levels.
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October 29th, 2008 at 11:13 am
[…] Credit Repair FTC Release ‘Operation Clean Sweep’ Fair Credit Reporting Act Debthelp yahooBuzzArticleHeadline = “‘Operation Clean Sweep’”; […]
October 30th, 2008 at 11:21 am
Consumers are advised to contact state and local officials before joining a debt settlement program. Who to contact:
1. State attorney general
2. State banking division
3. County registrar
4. BBB
debt settlement companies should be registered in your state to provide third party debt adjustment services, if they are not simply do not join their program!
November 4th, 2008 at 6:25 pm
Debt settlement looks like it is stressful, expensive, and not guaranteed. I’d take bankruptcy over that.
November 5th, 2008 at 10:30 am
s2kreno - yes, it can be stressful, expensive, and not guaranteed — just like Chapter 13. Actually, it can be a lot less expensive when done properly.