Protect yourself by dodging credit repair gotchas
By Maureen Mahoney on Wednesday, October 29th, 2014
If you’re thinking about hiring a credit repair company to get your credit in shape, remember, these organizations aren’t always legitimate. Last summer alone, the Federal Trade Commission (FTC) has cracked down on at least two credit repair companies for bilking consumers out of thousands of dollars.
In June, the credit repair company RMCN Credit Services settled with the FTC for allegedly deceiving credit bureaus to get negative information removed from consumers’ credit reports. The FTC also charged RMCN for taking customers’ money before delivering a service. Both of these practices violate the Credit Reporting Organizations Act, a federal law designed to protect consumers from fraudulent credit repair companies.
In August, the FTC charged the American Bill Pay Organization and American Benefits Foundation for luring in customers by pretending that they were a legitimate non-profit organization funded by the federal government. Preying on customers who were desperate to improve their credit scores, they charged them about $1,000 up-front for debt settlement and credit repair services but didn’t help them at all.
Too many consumers are deceived into paying for fraudulent credit repair services. For example, Joseph from Philadelphia, PA says:
“I was referred to a credit repair site from the credit report site to a company that stole money from me through my bank account and did nothing to help me. They even told me to stop paying my mortgage. They even threatened to have me arrested when my bank’s fraud unit attempted to get some of my money back. They were taking money before they even had my information, which is illegal. I reported to consumer affairs, the attorney general and nothing has been done.”
As Joseph’s story shows, credit repair companies can sometimes hurt more than they help. Before you decide to work with one, be sure that you know your legal rights, and read up on common credit repair scams. Check out our new credit repair fact sheet to learn more about the ways in which shady credit repair companies may try to trick you. The fact sheet also points you to information on improving your credit report yourself.
To learn how to avoid a variety of Gimmicks and Gotchas – shady business dealings that can rob consumers of their hard-earned money — please visit our website. And if you’ve had an experience with a credit repair company, please share your story with us!