Credit Repair Scams

Congress has found that many “credit repair” companies rip off consumers through certain advertising and business practices. According to the Federal Trade Commission, those businesses mislead consumers into believing that adverse information in their credit reports can be deleted even if it’s accurate and recent.  Consumers are thereby cheated out of the money they pay for “credit repair.”

By encouraging and facilitating disputes to credit bureaus of accurate credit information, such credit repair companies cause credit bureaus like Equifax, Experian, and Trans Union to tend to view all consumer disputes with suspicion.  That makes it harder for people with actual false information to get it corrected. So credit repair scams are a plague on the whole system.

In response, Congress passed the Credit Repair Organizations Act, to protect the public from unfair or deceptive practices by credit repair companies and to make sure people are informed before they pay for “credit repair.”

Credit repair companies may not:

  • Make any misrepresentations about a consumer’s credit to credit bureaus or creditors
  • Misrepresent the services of the company
  • Charge or receive payment before services are fully performed
  • Provide services without a written contract signed and dated by the consumer
  • Try to obtain a waiver of any provisions of the law for credit repair organizations
Credit repair companies must give you, in writing:

  • A specific Disclosure of Consumer Credit File Rights
  • The Terms and conditions of payment
  • A full and detailed description of their services, including any guarantees and an estimated time frame for completion
  • The company’s name and address
  • A Notice of your right to cancel
  • A form for canceling
  • A copy of the signed agreement and anything else they make you sign
Credit repair companies must do things in this order:

  • Provide disclosure of Consumer Credit File Rights
  • Have consumer sign compliant contract
  • Wait for 3-day cancellation period
  • Fully perform service
  • Only then may they charge and receive payment

If a credit repair company has taken advantage of you, you are not alone.  Contact us for a free consultation about your rights.  If you’ve been ripped off, we’ll go after the credit repair company and make them pay.

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