Two companies offering illegitimate credit repair services to consumers were busted by the Federal Trade Commission. These establishments claimed that they were qualified by the Commission to deliver such services. However, the FTC identified that they had no such services.
The busted establishments were found out to repairing their client's credit report from all negative information including "late payments, charge-offs, collections, tax liens, repossessions, bankruptcies, and judgments, even when the information was accurate and not obsolete." These kinds of services are considered to be scams especially as the companies charged the consumers before they did any of these things. The claims clearly meant that the companies violated the Credit Repair Organizations Act.
Both cases used the newspaper and the internet to advertise the said services.
To clarify consumers about the services they offer, FTC continuously remind consumers about the scammers and fraudulent credit repair services. Apart from that, it is important to consider investigating the companies you plant to transact with in relation to your credit repair.
There are plenty of ways you can determine if the company is legitimate or not. Here are some seven signs that would tell if the company is working on a scam:
1. They do not give you a copy of the "Consumer Credit File Rights Under State and Federal Law" which informs you of your rights to obtain a credit report and dispute inaccurate credit report information.
2. They do not give you a copy of the contract to view before you are asked to sign it.
3. If they do give you a copy of the contract, it does not contain the following information:
(a). Amount you are being charged
(b). Details of the services performed on your behalf
(c). The date by which the services will be performed (or the span of time required to perform the services)
(d). The name and business address of the company
(e). A statement that lets you cancel the contract within three days
4. You are asked to pay before the service is implemented
5. They promise to accurately remove the negativities in your credit report.
6. They will create for you or ask you to create a new identity with a new social security number or federal employer identification number;
7. And they ask you to sign a form waiving your rights under the Credit Report Organizations Act.
FTC reminds consumers that stripping off damaging information on your credit report is not the proper way to repair bad credit. The legitimate way of doing this requires effort and patience on your part. In the hopes to lessen the confusion among consumers, FTC released the following information about the six frequently misunderstood claims:
1. They can permanently remove negative accounts on the credit report even when it's accurate and not obsolete;
2. thus, they can improve the a consumer's credit report or ability to obtain credit;
3. the full costs of the services and other restrictions;
4. material restrictions or limitations to purchase or receive goods or services;
5. any material aspect of their refund or cancellation policy; and
6. Any aspect of how the goods or services will perform.