U.S. cracks down on 'credit repair' scams
Government agency says companies that say they can repair your credit really can't.
NEW YORK (CNNMoney.com) - Government regulators are cracking down on companies that claim to remove negative information from consumer credit reports.
The Federal Trade Commission, along with the U.S. Postal Inspection Service and eight state law enforcement agencies, have identified 20 companies that promise to remove information from consumers' credit reports.
"Credit repair schemes are a big problem for consumers," Eileen Harrington, deputy director of the FTC's Bureau of Consumer Protection, said in a statement.
"Credit repair promoters generally charge hundreds of dollars, but don't deliver on their claims. The fact is, they can't. No one can legally remove accurate and timely information from your credit report," she said.
One of the scams involves Bad Credit B Gone, which the FTC alleges made promises of fixing reports and giving customers "the credit you always dreamed of!"
The Philadelphia-based company charged $500 to individuals and $700 to couples for its services, half of which was due up-front, according to the FTC.
The FTC has charged Bad Credit B Gone with violating the FTC Act by making false or misleading statements and is seeking to stop the company's operations and return money to customers.
The alleged scammers were identified through Project Credit Despair, which the FTC began coordinating last year in response to thousands of consumer complaints.
Harrington said there is never any reason for consumers to pay for credit repair.
"There is nothing any credit repair firm can do for you for a fee that you cannot do for yourself at little or no cost," her statement said.
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