DOJ and FTC Halt Deceptive Credit Repair Operation

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The Department of Justice recently obtained an injunction against a Texas-based “credit repair” firm for falsely claiming that the firm would remove negative information from its consumers’ credit reports.  The DOJ, acting upon notification and authorization by the FTC, enjoined the firm from filing fake identity theft reports to explain negative items on consumers’ credit reports.

The Commission alleges in a complaint filed by the U.S. Department of Justice on its behalf that the firm operated a deceptive credit repair scheme, violating section 5 of the FTC Act, the Credit Repair Organizations Act, and the Telemarketing and Consumer Fraud and Abuse Prevention Act.  The complaint alleges that the firm claimed to help repair consumers’ credit through a “two-step process.”  The Commission asserts that this “process” often fails to deliver on its promises harming customers.  The complaint also charges the firm with falsely claiming it can remove negative information from consumers’ histories through “advanced disputing” of negative items on a consumer’s credit report and by adding “credit building products” to boost credit scores, which can help consumers obtain loans and other credit at lower rates.  The government is seeking both civil penalties and consumer redress.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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