The Federal Trade Commission has obtained a settlement agreement with Keith Berggren and the "credit repair" company through which he did business, Clear Your Credit, Inc. The agreement settles FTC civil contempt of court charges against Berggren and Clear Your Credit for continuing to misrepresent that they could remove negative information about bankruptcies and automobile repossessions from consumers' credit reports, with an 83 percent success rate. Berggren admitted he violated the April 1996 consent order prohibiting him from misrepresenting credit improvement services.
The settlement permanently bars Berggren and Clear Your Credit from doing any business in connection with credit improvement services. Berggren is also required to notify all relevant clients that they do not have to pay the amount that they still owe on contracts they entered after April 12, 1996. Berggren conducted his business out of a Chicago, Illinois, address.
The FTC first filed charges against Berggren in April 1996, as part of its case against Giving You Credit, Inc., a San Diego-based franchisor of credit repair operations. Berggren was one of the largest "Independent Representatives" of Giving You Credit in the country, and advertised his services by placing posters on telephone poles and bus stop benches, and business cards on car windshields. The case was one of several included in the FTC's "Operation Payback," a crackdown on credit repair firms nationwide. The earlier case resulted in a permanent injunction against deceptive credit repair claims.
On March 4, 1997, the FTC asked the federal district court in Chicago to issue an order to show cause why Berggren and Clear Your Credit should not be held in contempt for violating the April 1996 settlement. The court granted that motion as well as the FTC's request for an ex parte asset freeze against the defendants and immediate access to company records.
The FTC cautions consumers in a brochure titled "Credit Repair: How to Help Yourself" that no one can legally remove negative information that is accurate and timely (up to 10 years old for bankruptcies, generally seven years old for other negative information) from a credit report. The Fair Credit Reporting Act allows consumers to request a reinvestigation of information in their credit reports that they dispute as inaccurate or incomplete, and there is NO CHARGE for this. According to the brochure, "Everything a credit repair clinic can do for you legally, you can do for yourself at little or no cost." Consumers can obtain a copy of their credit reports free if they've been denied credit within the last 30 days -- credit bureaus or credit reporting agencies are listed in the yellow pages of their phone books. If the report contains errors, consumers should identify each item they dispute, explain why it's disputed, and request that the credit bureau from which the report was obtained conduct a reinvestigation. If the reinvestigation does not resolve the dispute, the credit bureau must include the consumer's version of the dispute (up to 100 words) in the credit files.
The Commission vote to accept the civil contempt settlement in the Clear Your Credit case was 5-0. It was filed in U.S. District Court for the Northern District of Illinois, Eastern Division, on March 24 and signed by the judge on March 25, 1997. It requires the court's approval to become binding.
NOTE: The agreement between the FTC and the defendants is for settlement purposes only. Such consent orders have the force of law when signed by the judge.
Copies of the "Credit Repair" brochure mentioned above, the civil contempt settlement in this case and a news release regarding Operation Payback are available from the FTC's web site at http://www.ftc.gov and also from the FTC's Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 1-866-653-4261. Other documents associated with this case are available from the Public Reference Branch. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.
(FTC File No. X960101)
(Civil Action No. 96 C 2088)