Complain about a product or service

FTC Charges Home Buying Operation With Credit Repair Scheme

Consultancy claimed it could remove negative information from credit reports

By Martin H. Bosworth
ConsumerAffairs.Com

May 23, 2008

According to the complaint, the company would advertise to prospective clients that it had the power to improve their credit scores from 50 to 100 points, so that they could then qualify for fully-financed mortgages at better rates, and could buy homes through the company's network of lenders and referral agents.

"Before performing the promised credit repair services, [HBCN's] representatives typically request and require at least partial payment for those services, specifically, advance payment of at least $99 for the pure credit repair services and $399 for the bundled credit repair and home-buying consulting services," the agency said in its complaint.

"[HBCN] also [require] additional weekly or monthly advance payments for credit repair services, typically ranging from $19 per week to $49 per month, all before performing the promised credit repair services."

The FTC charged HBCN under the Credit Repair Organizations Act (CROA), the law that governs credit repair companies' conduct. It imposed a civil judgment of $573,000 and ordered restitution to customers of $40,000, but agreed to suspend much of the penalty after HBCN claimed it was financially destitute.

No quick fix

Many "credit repair agencies" falsely claim that negative information such as bankruptcies, liens, judgments, and delinquent payments can be removed from credit reports, even if the information is accurate.

Generally, negative items such as "charge-offs" stay on a credit report for seven years. Bankruptcies remain on credit reports for ten years from the date of judgment, and tax liens remain on a report until they are paid, after which they are recorded for seven years from the date of payment.

Inaccurate information on a credit report, such as charges incurred from misuse of the card stemming from identity theft, can be removed through the tedious process of disputing the information with the major credit bureaus.

The FTC and state legislators regularly target companies that claim they can permanently remove negative information from credit reports or otherwise rehabilitate their credit histories, and who regularly bill their customers hefty advance fees for the job.

Report Your Experience
If you've had a bad experience -- or a good one -- with a consumer product or service, we'd like to hear about it. All complaints are reviewed by class action attorneys and are considered for publication on our site. Knowledge is power! Help spread the word. File your consumer report now.

Follow us on Twitter.

Back to the top |