Texas has charged two El Paso-based companies with operating unlicensed credit repair and credit restoration services. The State's enforcement action names Max Credit of El Paso - which is also known as Max Credit Express and Max Credit Express LLC - and its owner Jorge Almaraz; and Francisco Payan, the owner of Max Credit West as defendants.

"These defendants are charged with unlawfully misleading financially struggling Texans in an effort to recruit customers," said Texas Attorney General Greg Abbott. "Not only did the defendants operate unlicensed credit service organizations, but they also falsely indicated their agencies were law firms. Today's enforcement action seeks restitution for the defendants' customers and asks the court to prevent their firms from operating in violation of Texas law."

According to court documents filed by the State, the defendants advertised - and continue to advertise - their services to English and Spanish speakers with poor credit. Advertising through billboards, direct mail and the Internet, the defendants marketed their purported ability to repair their customers' credit histories and credit ratings

Credit repair services sometimes claim to be things they aren't, and Abbott says that's the case with the two companies. According to state investigators, the defendants' website falsely and unlawfully claims their organization is a "legal firm."

Inaccurate information

The site also inaccurately states that the defendants specialize in resolving poor credit pursuant to federal laws such as the Fair Credit Reporting Act (FCRA). However, Almaraz and Payan are not actually lawyers - and Payan has admitted he is not an FCRA expert.

The legal action also charges the defendants with unlawfully operating unlicensed credit service organizations (CSO). Under the Texas Credit Services Organization Act, CSOs must register with the Secretary of State and obtain a surety bond or surety account.

The State's investigation indicates that the defendants sold credit repair services to over 300 customers while the two companies were unregistered and lacked a bond. They allegedly charged $695 for individuals and $1,095 per couple.

After receiving a Civil Investigative Demand - a type of subpoena - from the Attorney General's Office, Almaraz took steps to register a newly created firm with state authorities. However, according to State investigators, the defendant's newly created, registered firm also improperly continue to make misleading claims in their advertisements.

Abbott is seeking restitution for the defendant's customers as well as civil penalties of $20,000 per violation of the Texas Deceptive Trade Practices Act.

Consumers who encounter an offer for credit repair services should take several steps before signing a contract or agreement to repair or improve their credit:

Check their credit report. All Texans may request a free copy of their credit report once a year from each of the nationwide consumer credit reporting companies - Equifax, Experian, and TransUnion. The official site created by the three major credit bureaus is www.annualcreditreport.com. 

Do their own research before believing a company's promise to fix or remove "negative items" on a credit report. Only items that are erroneous, inaccurate or obsolete (usually more than seven years old) can be legally removed from a debtor's credit report. 

Check with the Better Business Bureau and the Attorney General's Office and ask whether complaints have been filed against the company.