Court Closes Book on Credit Repair Rip-off

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A federal judge has ruled that a bogus credit repair company and its owner violated the law by making false and misleading claims, and billing in advance for its services. The court ordered them to pay more than $322,000, the Federal Trade Commission said yesterday.

This action was a result of "Project Credit Despair," a crackdown on 20 operations that deceptively claimed they could remove negative information from consumers' credit reports -- even if that information was accurate and timely.

In response to thousands of complaints, the FTC began coordinating the crackdown last year with the U.S. Postal Inspection Service, the State of Louisiana Office of Financial Institutions and other state law enforcement agencies. The actions involved operations throughout the nation, many of that typically charged hundreds of dollars in advance for the service.

The FTC charged Bad Credit B Gone and Joseph A. Graziola III with violating the FTC Act by making false and misleading statements, including claims that they could substantially improve consumers' credit reports by permanently removing negative information that was accurate and not obsolete. They also violated the Credit Repair Organizations Act (CROA) by requiring advance payment for their credit repair services.

The complaint was filed in the U.S. District Court for the Northern District of Illinois, Eastern Division, Chicago, which granted a default judgment and order for permanent injunction and monetary relief.

Under the court's ruling, the defendants are also permanently prohibited from misrepresenting that they can substantially improve most consumers' credit reports by permanently removing negative information from the reports, even when the information is accurate and not obsolete; misrepresenting any fact material to a person's decision to purchase credit repair services from them; misrepresenting any material fact regarding anything sold or offered for sale by them; and assisting others who violate these provisions.

They also are permanently prohibited from violating the CROA, including charging or receiving payment for credit repair services before they have been performed and making deceptive statements to induce consumers to purchase credit repair services.

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