FTC Charges 20 Firms With Making False Claims About Credit Repair

The federal government charged 20 companies, including two in California, with making false claims that they can repair a consumer’s bad credit rating for a fee.

In complaints filed in federal courts nationwide, the Federal Trade Commission contended that the companies violated the law by making deceptive claims about improving customers’ credit ratings by removing derogatory information from credit files.

The agency asked the courts for an injunction to bar allegedly false advertising claims made by the companies, partially through unsolicited e-mail.

In 12 cases, the FTC said in a statement, the courts issued temporary restraining orders and froze all or part of the companies’ assets.

“Ultimately, in all cases, the FTC is seeking permanent injunctions prohibiting the alleged deceptive practices” as well as financial compensation to customers, the agency said.

Eleven similar cases are being pressed in state courts, including California, the FTC said.

“Credit repair organizations that promise to clean up consumers’ credit reports by removing accurate, up-to-date credit information are breaking federal law,” said Jodie Bernstein, director of the FTC’s Bureau of Consumer Protection. “This fraud is particularly appalling because it preys on consumers who already find themselves in financial difficulty as a result of layoffs, divorce or heavy medical expenses.”

Although there are legitimate credit counseling services, she said, “the FTC has never seen a legitimate credit ‘repair’ company.”

No one can erase negative credit information if it is accurate and current, the agency said. Any inaccurate information can be corrected at little or no cost to consumers, it said.

Pathfinder Research Co. of Los Alamitos was among the 12 companies subjected to temporary restraining orders and freezing of assets. Keith Gill and his law offices in Woodland Hills was among the eight other companies targeted by the federal government.