Florida attorney Jack Schrold has agreed to a settlement with the Federal Trade Commission over his role in an illegal credit repair business. The case against Schrold was one of 31 filed in March 1998 as part of "Operation Eraser" -- a federal-state crackdown on fraudulent credit repair companies. The FTC alleged that all of the defendants operated deceptive credit repair schemes by promising consumers that they could restore their creditworthiness for a fee. Schrold operated a credit repair business through his Fort Lauderdale, Florida, law firm. As part of the proposed settlement, Schrold would be required to pay an $11,000 civil penalty and would be prohibited from futher misrepresentations with regard to credit repair services.
Schrold, who advertised nationally in various newspapers and on the Internet, charged a retainer of $99 for his services, along with $25 for each item successfully removed. But, according to the FTC, Schrold cannot remove legitimate negative information and, where there are actual errors in credit reports, consumers have the legal right to have those corrected for free most of the time. The FTC charged that Schrold violated the FTC Act by making deceptive claims about improving consumers' credit records, and violated the Credit Repair Organization Act (CROA), by requiring advance payment for credit repair services and misrepresenting the credit repair services that would be performed.
The proposed settlement, which requires the court's approval to become binding, would permanently prohibit Schrold from abusive credit repair business practices and illegal behavior, including:
Schrold also would be prohibited from violating any provisions of the CROA in the future, and is required to pay an $11,000 civil penalty. In addition, Schrold would be required to notify any credit bureau to whom he made a negative report about any of his customers, telling them that the negative item should be removed, and also notify any of his customers who still owe money for credit repair services that they are no longer obligated to pay.
Finally, the proposed settlement contains various other recordkeeping provisions designed to assist the FTC in monitoring the defendant's compliance.
The Commission vote approving the filing of the proposed settlement was 4-0. The proposed stipulated judgment was filed by the Department of Justice, at the request of the FTC, in the U.S. District Court for the Southern District of Florida, in Fort Lauderdale. It was signed by the judge on March 29, 1999. The matter was handled by the FTC's Chicago Regional Office.
NOTE: This stipulated judgment is for settlement purposes only and does not constitute an admission by the defendant of a law violation. Consent judgments are subject to approval by the court and have the force of law when signed by the judge.
Copies of the news release, other information about "Operation Eraser," and a number of publications about consumer credit issues are available from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-FTC-HELP (202-382-4357); TDD for the hearing impaired 1-866-653-4261. Copies of the settlement will be available shortly. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.
(FTC Matter No. X980045)
(Civil Action No. 98-6212 CIV-ZLOCH)