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A federal judge has ruled that a bogus credit repair company and its owner violated the law by making false and misleading claims, and billing in advance for its services, and has ordered them to pay more than $322,000. This action was a result of “Project Credit Despair,” a crackdown on 20 operations that deceptively claimed they could remove negative information from consumers’ credit reports – even if that information was accurate and timely.

In response to thousands of consumer complaints, the FTC began coordinating the crackdown last year with the U.S. Postal Inspection Service, the State of Louisiana Office of Financial Institutions, and other state law enforcement agencies. The actions involved operations throughout the nation, many of which promised to remove accurate and timely information from consumers’ credit reports, and typically charged hundreds of dollars in advance for the service.

The FTC charged Bad Credit B Gone and Joseph A. Graziola III with violating the FTC Act by making false and misleading statements, including claims that they could substantially improve consumers’ credit reports by permanently removing negative information that was accurate and not obsolete. They also violated the Credit Repair Organizations Act (CROA) by requiring advance payment for their credit repair services.

Under the court’s ruling, the defendants are permanently prohibited from misrepresenting that they can improve substantially most consumers’ credit reports by permanently removing negative information from the reports, even when the information is accurate and not obsolete; misrepresenting any fact material to a person’s decision to purchase credit repair services from them; misrepresenting any material fact regarding anything sold or offered for sale by them; and assisting others who violate these provisions. They also are permanently prohibited from violating the CROA, including charging or receiving payment for credit repair services before they have been performed, and making deceptive statements to induce consumers to purchase credit repair services. The defendants also must pay $322,047.38 in consumer redress. In addition, they are prohibited from collecting, or trying to collect, payment from their customers for credit repair services, or disclosing personal information about them.

The Commission vote to authorize staff to file the complaint against Bad Credit B Gone, LLC, was 4-0 on December 1, 2005, when there was a vacant seat on the Commission.

The complaint was filed in the U.S. District Court for the Northern District of Illinois, Eastern Division, in Chicago, which granted a default judgment and order for permanent injunction and monetary relief.

The FTC advises that only time, a conscious effort, and a personal debt repayment plan can improve your credit report. The first step is to learn what information is in your credit report. If you find errors or mistakes, federal law gives you the right to have them corrected – free of charge. �鶹��ý law requires that the nationwide consumer reporting companies – Equifax, Experian, and TransUnion – provide you with a free copy of your credit report once every 12 months, if you ask for it. To order your free report, visit annualcreditreport.com, call 1-877-322-8228, or complete and mail the Annual Credit Report Request Form. Other credit repair information is available on the FTC’s Web site, http://www.ftc.gov.

NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant has actually violated the law. The case will be decided by the court.

Copies of the legal documents associated with these cases are available from the FTC’s Web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint in or (bilingual counselors are available to take complaints), or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at http://www.ftc.gov. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to thousands of civil and criminal law enforcement agencies in the U.S. and abroad.

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