FTC CASES IN "OPERATION ERASER"

Compass Northeast Credit Service, of Columbia, South Carolina, and its principal officers, Nathaniel Harrell, Jr. and Valerie Harrell. Charged with misrepresenting their ability to remove accurate, negative information from consumer's credit reports, and from collecting payment up- front for services. Complaint filed under seal on February 26, 1998 in U.S. District Court for the District of South Carolina, Columbia Division. The seal was lifted March 3, 1998. (Civil Action No. 3:98-542-17) (FTC File No. 982 3025). FTC Staff Contact: Chris M. Couillou, Atlanta Regional Office, Suite 5M35 Midrise Bldg., 60 Forsyth Street S.W., Atlanta, Georgia 30303; 404-656-1399.

Second Federal Credit, Inc., and its president, Frank DeMaio; Credit Repair Network, and its principal officer Henry J. Frattaroli, Jr.; New England Financial, and its principal officer, Raymond J. Caluori; and Phillips Hall, Inc., doing business as Allied Credit Services, and its president, Howard Hall. All four of these Massachusetts firms operated credit repair businesses. In four separate complaints that the FTC filed jointly with the Commonwealth of Massachusetts, these defendants were charged with collecting payment up-front for credit repair services before such services were fully performed and with misrepresenting that they can permanently remove accurate and current negative information from credit reports. The complaints allege violations of the CROA, the FTC Act and the Massachusetts Consumer Protection Act. The FTC and the Commonwealth also charged Second Federal Credit, Inc. and its president with misrepresenting that the company could legally alter consumers’ identification to conceal adverse credit information from consumers’ credit records by obtaining Taxpayer Identification Numbers for consumers to use instead of their Social Security numbers when applying for credit. Complaints filed under seal on February 26, 1998 in U.S. District Court for the District of Massachusetts, in Boston. The seal was lifted March 3, 1998. Civil Action Nos. 98-10348NG (Second Federal Credit, Inc.); 98-10349NG (Credit Repair Network); 98-10350NG (New England Financial); and 98-10351NG (Phillips Hall, Inc., doing business as Allied Credit Services). FTC Staff Contact: Pamela J. Wood, Boston Regional Office, 101 Merrimac Street, Suite 810, Boston, Massachusetts 02114-4719; 617-424-5960. Massachusetts Attorney General Press Contact: Marsha Cohen, Massachusetts Attorney General’s Office, 1 Ashburton Place, Boston, MA 02108; 617-727-2543.

Midwest Management Associates, Inc., of Chicago, Illinois, and its principal officer, Andy Watson. Complaint charged that the defendants misrepresented that they could substantially improve most consumers’ credit reports by permanently removing accurate, non-obsolete negative information. Complaint filed on February 26, 1998 in U.S. District Court for the Northern District of Illinois, Eastern Division. (Civil Action No.: 98-C-1218). FTC Staff Contact: C. Steve Baker or Mary Elizabeth Tortorice, Chicago Regional Office, 55 E. Monroe Street, Suite 1860, Chicago, Illinois 60603-5701; 312-960-5634.

National Credit Management Group and its principals Glen Buzzetti and Joseph Ferguson of Fort Lee, New Jersey. According to the FTC, National Credit Management is a large company -- doing business as 1-800-YES-CREDIT -- that advertises on television and radio, imploring consumers to call a toll-free number to receive an unsecured credit card. During the telephone sales pitch, the defendants allegedly offered consumers a “credit analysis,” suggesting they will help consumers improve their credit ratings, in return for an up-front fee of $95. The defendants also obtained the consumers’ checking account numbers, the FTC said, and often withdrew additional funds from consumers’ accounts without their express authorization for products that they had not ordered. In its complaint, the FTC alleges that consumers typically failed to receive either the “guaranteed” credit cards or the improvement to their credit records. The complaint alleges violations of the CROA by obtaining an advance fee for their credit repair services and failing to provide the required written pre-sale disclosures; and violations of the Telemarketing Sales Rule by making unauthorized bank account debits, obtaining advance fees for “guaranteed” credit cards, and failing to disclose the true costs of their services; also charged with violating the FTC Act by misrepresenting the types of services they will provide consumers and the fact that their credit applications are “pre-approved.” Complaint filed in the U.S. District Court for the District of New Jersey, Newark Division, on March 3, 1998. (Civil Action No. 98-936) (FTC File No. 982 3003). FTC Staff Contact: Russell W. Damtoft, Chicago Regional Office, 55 E. Monroe Street, Suite 1860, Chicago, Illinois 60603-5701; 312-960-5634. The New jersey Attorney General simultaneously filed a similar action in the same court, and the court has consolidated the FTC's and New Jersey's cases.

Quaite & Associates/The Credit Solver, and its principal Donald Quaite of Dallas, Texas, and Credit Services and its principal John Mancini of Conroe and Dallas, Texas. In two separate complaints, these defendants were charged with collecting payment up-front for credit repair services before such services were fully performed and with representing they can permanently remove accurate and current negative information from credit reports. Quaite complaint filed under seal in the U.S. District Court for the Northern District of Texas, Dallas Division, on March 2, 1998. (Civil Action No. 398CV0552-P) (FTC File No. 982 3065). Credit Services complaint filed under seal in the U.S. District Court for the Northern District of Texas, Dallas Division on March 2, 1998. (Civil Action No. 3-98CV0553-X) (FTC File No. 982 3064). The seals were lifted March 5, 1998. FTC Staff Contact: W. David Griggs, Dallas Regional Office, 1999 Bryan Street, Suite 2150, Dallas, Texas 75201; 214-979-0213.

Pathfinder Research Company and its principal Brian Dale Prater of Los Alamitos, California. According to the FTC, Pathfinder sold its credit repair services through nationwide advertisements on radio, in yellow page advertisements, in print advertisements, and over the Internet, representing that the company can legally remove negative items from consumers’ credit reports. It allegedly charged from $300-$599 for its services. The FTC charged the defendants with collecting payment up-front for credit repair services before such services were fully performed and with misrepresenting the credit repair services they would perform. Complaint filed under seal in the U.S. District Court for the Central District of California, Los Angeles, on February 27, 1998. The seal was lifted March 4, 1998. (Civil Action No. SACV- 98-191 GLT (EEx) (FTC File No. 982 3072). FTC Staff Contact: Raymond E. McKown, Los Angeles Regional Office, 10877 Wilshire Boulevard, Suite 700, Los Angeles, California 90024; 310-824-4343.

Keith Gill, d.b.a. Law Offices of Keith Gill and Richard Murkey of Woodland Hills, California. The defendants allegedly solicited consumers to purchase their credit repair services through advertisements, an hour-long weekly radio broadcast and referrals. The FTC charged the defendants with collecting payment up-front for credit repair services before such services were fully performed and with misrepresenting their credit repair services. Complaint filed in the U.S. District Court for the Central District of California, Los Angeles, on March 2, 1998. (Civil Action No.98-1436 IH (MCX)) (FTC File No. 982 3073). FTC Staff Contact: Jennifer Larabee, Los Angeles Regional Office, 10877 Wilshire Boulevard, Suite 700, Los Angeles, California 90024; 310-824-4300.

Fighting Back, Inc. and its owner operating out of New York City. According to the FTC, Fighting Back’s brochures and company representatives describe the company’s credit repair services: “credit repair” and “file segregation.” The complaint alleges that the defendants misrepresented that they can improve substantially consumers’ credit records by removing accurate and timely negative information including judgments, late payments, charge-offs, repossessions, tax liens, etc. and that they can, through their “file segregation” services, legally alter consumers’ identification to conceal adverse credit information. Complaint filed under seal in the U.S. District Court for the Southern District of New York, on February 27, 1998. The seal was lifted date?? (Civil Action No. 98-CIV-1461) (FTC File No. 982 3019). FTC Staff Contact: Denise Tighe, New York Regional Office, 150 William Street, Suite 1300, New York, New York 10038; 212-264-1207

Dixie W. Cooley individually and doing business as DWC, in Scottsdale, Arizona. The FTC charged that through the use of unsolicited e-mail (commonly known as "spamming"), the defendant operated a credit repair scam. According to the FTC, Cooley's "spam" solicitations promoted a file segregation scheme. She claimed that consumers who responded to her e-mail and purchased her "product" (at a cost of $19.95 to $79.00) would learn how to create a new credit identity by obtaining a new social security number. The complaint was filed in the U.S. District Court for the District of Arizona, on March 4, 1998 (Civil Action No. CIV-98-0373- PHX-RGS) (FTC File No. 982 3111). FTC Staff Contact: Russell W. Damtoft, Chicago Regional Office, 55 E. Monroe Street, Suite 1860, Chicago, Illinois 60603-5701; 312-960-5634.

The following seven were filed by the Department of Justice on behalf of the FTC. In these cases, in addition to permanent injunctions against the defendants, the FTC is also seeking civil penalties:

Cornerstone Wealth Corporation operating out of Dallas, Texas. The FTC charged that Cornerstone illegally promised to improve most consumers’ credit reports by permanently removing bankruptcies, charge-offs, late payments and other negative information from consumers’ credit reports, even where such information is accurate and not obsolete. Complaint filed in the U.S. District Court for the Northern District of Texas, Dallas Division, on March 4, 1998. (Civil Action No. was not available) (FTC File No. 982 3086).

Credit Report Counselors and its principal, Mark Reiber of Cincinnati, Ohio. Credit Report advertises at least in part through a home page on the Internet. The site notes that the defendants require a partial advance payment before it will provide services, the FTC said. The site also asserts that they can remove items such as bankruptcies and late payments from consumer accounts. The complaint alleges violations of the CROA for requiring advance payment and the CROA and the FTC Act for making misleading claims of success in removing timely accurate information from credit reports. Complaint filed in the U.S. District Court for the Southern District of Ohio, on March 4, 1998. (Civil Action No.: C-1-98-171) (FTC File No. 982 3084).

AAA Credit Services and its principal, Angela Christie of Columbia, South Carolina. The defendants were charged by the FTC with violations of both the CROA and the FTC Act for requiring advance payments before services were performed and not providing the requisite disclosures or three-day right to cancel. Complaint was filed in U.S. District Court for the District of South Carolina, Charleston Division, on February 27, 1998. (Civil Action No. 2:98- 0546-12) (FTC File No. 982 3085)

Nationwide Credit Information Services and its president Neil Angelicola of Freehold, New Jersey. Its printed materials directly claim that by “a systematic process of disputing all inaccurate or unverifiable credit” they “have helped thousands of consumers.” Nationwide does not give consumers the mandatory disclosure requirements or grant the three day right to cancel. The company also does not detail what services they are obligated to perform. The complaint alleges violation of the federal statutes for requiring advance payment and making false representations about general success in removing accurate information from credit reports. Complaint was field in U.S. District Court for the District of New Jersey, on March 4, 1998. (Civil Action No. was not available ) (FTC File No. 982 3082)

Law Offices of Jack Schrold of Fort Lauderdale, Florida. The FTC alleged that Schrold requested or received money in advance and claimed that he could successfully have truthful information permanently deleted from most consumers’ credit reports. In addition, the complaint alleges that Schrold has violated the CROA by not providing the mandatory disclosures or allowing a three day right to cancel. Complaint was filed in the U.S. District Court for the Southern District of Florida, on March 2, 1998. (Civil Action No. 98-6212-CIV-ZLOCH) (FTC File No. 982 3088)

Equity Funding & Associates, Inc. and its president, John Cini of Bloomfield, Michigan. According to the FTC, Equity Funding claims that it “can improve substantially most consumers’ credit reports or profiles by permanently removing bankruptcies, charge-offs, later payments, and other negative information from consumers’ reports, even where such information is accurate and not obsolete.” The complaint challenges the practice of obtaining advance payment and the claims of success in removing accurate information from credit reports. Complaint was filed in the U.S. District Court for the Eastern District of Michigan, on March 4, 1998. (Civil Action No. 98-70995) (FTC File No. 982 3083)

Credit Corporation of America and its president, Greg Ruiz of New Orleans, Louisiana. Credit Corporation’s ads promised to “Legally clear your credit” and “Remove charge-offs, judgments, collections, etc,” the FTC said. The complaint alleges that Credit Corporation has claimed that it “can improve substantially most consumers’ credit reports or profiles by permanently” removing negative information even where it is accurate and not obsolete. Complaint was filed in the U.S. District Court for the Eastern District of Louisiana, on March 2, 1998. (Civil Action No. 98-0658) (FTC File No. 982 3087

FTC Staff Contact For these Seven Cases:

C. Steven Baker or Russell W. Damtoft,
Chicago Regional Office,
55 E. Monroe Street, Suite 1860,
Chicago, Illinois 60603-5701; 312-960-5634

Department of Justice Media Contact :

Main Press Office: 202-616-2777