DEBRA A. VALENTINE
General Counsel

MICHAEL J. BLOOM (MB 7732)
RHONDA J. MCLEAN (RM 9140)
DENISE V. TIGHE (DT 0175)
Federal Trade Commission
150 William Street, Suite 1300
New York, NY 10038
(212) 264-3010
Attorneys for Plaintiff

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

FEDERAL TRADE COMMISSION,

Plaintiff,  CIVIL ACTION NO.

v.

FIGHTING BACK, INC. (a/k/a FIGHTING ) BACK CONSULTANTS, INC., FIGHTING BACK CO., FIGHTING BACK CREDIT COMPANY, and WILLIAM S. LICATA, individually and as an officer of FIGHTING BACK, INC.,

Defendants.

COMPLAINT FOR INJUNCTIVE AND OTHER EQUITABLE RELIEF

Plaintiff, the Federal Trade Commission ("FTC" or "the Commission"), for its complaint, alleges as follows:

1. The Commission brings this action under Sections 13(b) and 19 of the Federal Trade Commission Act (“FTC Act”), 15 U.S.C. 53(b) and 57b, and Section 410(b) of the Credit Repair Organizations Act, 15 U.S.C. 1679h(b), to obtain preliminary and permanent injunctive relief, restitution, rescission, disgorgement and other equitable relief for defendants’ deceptive acts or practices in connection with the sale and offering for sale of credit repair services in violation of Section 5(a) of the FTC Act, 15 U.S.C. 45(a), and the Credit Repair Organizations Act , 15 U.S.C. 1679 et seq.

JURISDICTION AND VENUE

2. This Court has jurisdiction of this matter pursuant to 28 U.S.C. 1331, 1337(a), and 1345, and 15 U.S.C. 53(b), 57b and 1679h(b).

3. Venue in this district is proper under 28 U.S.C. 1391(b) and (c), and 15 U.S.C. 53(b).

THE PARTIES

4. Plaintiff, the Federal Trade Commission, is an independent agency of the United States Government created by statute. 15 U.S.C. 41 et seq. The Commission is charged, inter alia, with enforcement of Section 5(a) of the FTC Act, 15 U.S.C. 45(a), which prohibits unfair or deceptive acts or practices in or affecting commerce. The Commission also enforces the Credit Repair Organizations Act. 15 U.S.C. 1679h(a). The Commission is authorized to initiate federal district court proceedings, by its own attorneys, to enjoin violations of the FTC Act and the Credit Repair Organizations Act in order to secure such equitable relief, including consumer redress, as may be appropriate in each case. 15 U.S.C. 53(b), 57b, and 1679h(b).

5. Defendant Fighting Back, Inc. (a/k/a Fighting Back Consultants, Inc., Fighting Back Co., and Fighting Back Credit Company) ("Fighting Back" or “Company”) is a New York business entity with its principal place of business located at 230 East 29th Street, New York, NY 10016. The corporate defendant also maintains addresses at 127 East 59th Street, Room 201, New York, NY 10022; 1162 St. Georges Avenue, Suite 193, Avenel, NJ 07001; and 6342 Forest Hill Boulevard, Suite 301, West Palm Beach, Fl. 33415. Fighting Back has transacted business in the Southern District of New York.

6. Defendant William S. Licata ("Licata"), is an officer, director, and/or principal owner of Fighting Back, Inc. which sells credit repair services to the public. At all times material to this complaint, individually or in concert with others, Licata formulated, directed, controlled, or participated in the acts and practices of the corporate defendant, including the acts and practices set forth in this complaint. He has transacted business in the Southern District of New York.

COMMERCE

7. At all times relevant to this complaint, defendants have maintained a substantial course of trade in the offering for sale and selling of credit repair services, in or affecting commerce, as “commerce” is defined in Section 4 of the FTC Act, 15 U.S.C. 44.

DEFENDANTS' BUSINESS PRACTICES

8. Since at least 1985, defendants advertised, promoted, offered for sale, and sold credit repair services to consumers throughout the United States.

9. Defendants offer two types of credit repair services: "credit repair" and "file segregation" to consumers for the claimed purpose of getting consumers who have had credit problems "out of [their] present credit crunch" so that they can "get back into the credit system and obtain the credit they need."

10. Through Company representatives and Company brochures given to consumers, defendants have offered "credit repair" services to consumers purporting to permanently remove accurate, nonobsolete derogatory information from, or improve, consumers' credit histories, credit records, and credit ratings. Defendants claim to permanently remove judgments, late payments, charge-offs, repossessions, tax liens, collection accounts, bankruptcies, foreclosures, unpaid student loans, and other negative information from consumers' credit reports, even where such information is accurate and nonobsolete.

11. Typical and illustrative of defendants’ representations about their "credit repair" services are the following:

a. "YES! You can remove negative information from your credit report[.] EVEN IF ITS TRUE!"

b. "We help you remove all forms of negative information from your credit report, either by providing you with a kit that lets you do it yourself, or by doing the work for you."

c. "Fighting Back, Inc. uses the Fair Credit Reporting Act, which was passed by Congress in 1970 to protect consumer rights. It forces the credit bureaus to remove certain types of negative information from your credit report."

d. "You can expect to start seeing results within about 45 days, and the complete credit repair process takes only between 6 and 8 months."

e. "[T]hey can remove the bankruptcy, that’s no problem."

12. Before providing any of the promised "credit repair" services, defendants’ representatives and Company brochures request and obtain at least partial payment for these services. Defendants have typically charged an initial fee for "credit repair" of $395, with three additional payments of $200, for a single person, and an initial fee of $595, with four additional payments of $250, for a couple, totaling between $995 and $1,595 respectively.

13. Defendants have offered a second type of credit repair service to consumers, referred to as "file segregation" representing that they can improve consumers’ credit histories, credit records, and credit ratings by assisting them in establishing new credit files or credit identities to be used for credit purposes. Defendants inform consumers that they will obtain, in about ten (10) to thirty (30) days, Employer Identification Numbers ("EIN") or Taxpayer Identification Numbers ("TIN") from the federal government on consumers’ behalves. Consumers are then to use this newly obtained EIN or TIN, instead of their social security numbers, for credit purposes. The purported result of the "file segregation" service is to conceal any adverse credit information consumers have in their files with the credit reporting agencies.

14. Typical and illustrative of defendants’ representations about their "file segregation" services are the following:

a. "YES! Now you can have a brand new, blank credit file."

b. "A NEW CLEAN CREDIT FILE IN JUST 30 DAYS!"

c. "UNTIL TODAY, YOU HAD NO CHOICE, but thanks to our unique, innovative program you can obtain a totally clean credit file in just 30 days.!!!"

d. ”[T]here’s a program that the government just put out a couple of months. (Pause). A few months back called “Fresh Start”. . . giving consumers, such as yourself, who have poor credit, a second chance . . . . [W]ith this program you can get a new number which acts as your SSI number strictly for credit purposes only.”

e. ”We give people a brand new credit file . . . . It’s a brand new government program. So anybody who has bad credit can get a brand new fresh start."

15. Before providing any of the promised "file segregation" services, defendants’ representatives and Company brochures request and obtain full payment for these services. Consumers have agreed to purchase defendants’ services based on these representations. Defendants have typically charged $375 for a single person, and $750 for a couple for "file segregation" services.

THE CREDIT REPAIR ORGANIZATIONS ACT

16. The Credit Repair Organizations Act, 15 U.S.C. 1679a-j (1997), was enacted on September 30, 1996 to take effect six months after enactment. The Act has been in full force and effect since April 1, 1997.

17. Defendants are "credit repair organizations" as that term is defined in the Credit Repair Organizations Act, 15 U.S.C. 1679a(3).

18. The purposes of the Credit Repair Organizations Act, according to Congress, are:

(1) to ensure that prospective buyers of the services of credit repair organizations are provided with the information necessary to make an informed decision regarding the purchase of such services; and (2) to protect the public from unfair or deceptive advertising and business practices by credit repair organizations. 15 U.S.C. 1679(b).

19. Section 404(a)(3) of the Credit Repair Organizations Act prohibits all persons from making or using any untrue or misleading representation of the services of the credit repair organization. 15 U.S.C. 1679b(a)(3).

20. Section 404(b) of the Credit Repair Organizations Act prohibits credit repair organizations from charging or receiving any money or other valuable consideration for the performance of any service which the credit repair organization has agreed to perform before such service is fully performed. 15 U.S.C. 1679b(b).

21. Pursuant to Section 18(d)(3) of the FTC Act, 15 U.S.C. 57(d)(3), and Section 410(b)(1) of the Credit Repair Organizations Act, 15 U.S.C. 1679h(b)(1), any violation of any requirement or prohibition of the Credit Repair Organizations Act constitutes an unfair and deceptive act or practice in commerce in violation of Section 5(a) of the FTC Act, 15 U.S.C. 45(a).

VIOLATIONS OF THE CREDIT REPAIR ORGANIZATIONS ACT

COUNT ONE

22. In connection with the performance of services for consumers by a credit repair organization, as that term is defined in Section 403(3) of the Credit Repair Organizations Act, 15 U.S.C. 1679a(3), defendants have made untrue or misleading representations to induce consumers to purchase their "credit repair" and/or "file segregation" services, including, but not limited to:

a. the representation that defendants can, through their "credit repair" services, improve substantially consumers’ credit records, credit histories, or credit ratings by permanently removing judgments, late payments, charge-offs, repossessions, tax liens, collection accounts, bankruptcies, foreclosures, unpaid student loans, and other negative information from consumers' credit reports, even where such information is accurate and nonobsolete; and

b. the representation that defendants can, through their "file segregation" services, legally alter consumers’ identification to conceal adverse credit information from consumers’ credit records, credit histories, or credit ratings by obtaining Employer Identification Numbers ("EIN") or Taxpayer Identification Numbers ("TIN") for consumers to use, instead of their social security numbers, for credit purposes.

23. In truth and in fact, defendants cannot:

a. improve substantially consumers’ credit records, credit histories, or credit ratings by permanently removing negative information from consumers' credit reports, where such information is accurate and nonobsolete; and

b. legally alter consumers’ identifications to conceal adverse credit information from consumers’ credit records, credit histories, or credit ratings by obtaining EINs or TINs for consumers and having consumers use the EINs or TINs instead of their social security numbers.

24. Defendants have thereby violated Section 404(a)(3) of the Credit Repair Organizations Act, 15 U.S.C. 1679b(a)(3).

COUNT TWO

25. In connection with the performance of services for consumers by a credit repair organization, as that term is defined in Section 403(3) of the Credit Repair Organizations Act, 15 U.S.C. 1679a(3), defendants have charged or received money or other valuable consideration for the performance of "credit repair" and/or "file segregation" services that defendants have agreed to perform before such services were fully performed.

26. Defendants have thereby violated Section 404(b) of the Credit Repair Organizations Act, 15 U.S.C. 1679b(b).

SECTION 5 OF THE FTC ACT

27. Section 5(a) of the FTC Act, 15 U.S.C. 45(a), provides that “unfair or deceptive acts or practices in or affecting commerce are hereby declared unlawful.”

28. Misrepresentations of material fact constitute unfair or deceptive acts or practices prohibited by Section 5(a) of the FTC Act.

VIOLATIONS OF SECTION 5 OF THE FTC ACT

COUNT THREE

29. In connection with the advertising, marketing, promotion, offering for sale, or sale of credit repair services, defendants have made untrue or misleading statements to induce consumers to purchase their services, including, but not limited to, the representation that defendants can improve substantially most consumers’ credit reports or profiles by permanently removing judgments, late payments, charge-offs, repossessions, tax liens, collection accounts, bankruptcies, foreclosures, unpaid student loans, and other negative information from consumers' credit reports, even where such information is accurate and not obsolete.

30. In truth and fact, defendants cannot improve substantially most consumers’ credit reports or profiles by permanently removing judgments, late payments, charge-offs, repossessions, tax liens, collection accounts, bankruptcies, foreclosures, unpaid student loans and other negative information from consumers' credit reports, where such information is accurate and not obsolete.

31. Therefore, defendants’ representations are false and misleading constituting unfair and deceptive acts or practices in violation of Section 5(a) of the FTC Act, 15 U.S.C. 45(a).

COUNT FOUR

32. In connection with the advertising, marketing, promotion, offering for sale, or sale of credit repair services, defendants have, directly or by implication, made representations to induce consumers to purchase their services that defendants can legally alter consumers’ identification to conceal adverse credit information from consumers’ credit records, credit histories, or credit ratings by obtaining Employer Identification Numbers ("EIN") or Taxpayer Identification Numbers ("TIN") for consumers to use, instead of their social security numbers, for credit purposes.

33. In truth and in fact, defendants cannot legally alter consumers’ identifications to conceal adverse credit information from consumers’ credit records, credit histories, or credit ratings by obtaining EINs or TINs for consumers and having consumers use the EINs or TINs instead of their social security numbers.

34. Therefore, defendants’ representations are false and misleading constituting unfair and deceptive acts or practices in violation of Section 5(a) of the FTC Act, 15 U.S.C. 45(a).

CONSUMER INJURY

35. Consumers have suffered or are likely to suffer substantial monetary loss as a result of defendants’ unlawful acts or practices. Absent injunctive relief by this Court, defendants are likely to continue to injure consumers and harm the public interest.

THIS COURT'S POWER TO GRANT RELIEF

36. Sections 13(b) and 19 of the FTC Act, 15 U.S.C. 53(b) and 57b, and Section 410(b) of the Credit Repair Organizations Act, 15 U.S.C. 1679h(b), empower this Court to issue a permanent injunction against defendants’ violations of the Credit Repair Organizations Act and the FTC Act and, in the exercise of its equitable jurisdiction, to order such ancillary relief as preliminary injunction, rescission, restitution, disgorgement of profits resulting from defendants’ unlawful acts or practices, and other remedial measures.

PRAYER FOR RELIEF

WHEREFORE, Plaintiff respectfully requests that this Court, as authorized by Sections 13(b) and 19 of the FTC Act, 15 U.S.C. 53(b) and 57b, and pursuant to this Court’s own equitable powers:

(a) Award Plaintiff such preliminary injunctive and ancillary relief as may be necessary to avert the likelihood of consumer injury during the pendency of this action and to preserve the possibility of effective final relief;

(b) Permanently enjoin defendants from violating the Credit Repair Organizations Act and the FTC Act, as alleged herein, in connection with the advertising, promoting, offering for sale, and sale of credit repair services;

(c) Award such relief as the Court finds necessary to redress injury to consumers resulting from defendants' violations of the Credit Repair Organizations Act and the FTC Act, including but not limited to, rescission of contracts, the refund of monies paid, and the disgorgement of unlawfully obtained monies; and

(d) Award Plaintiff the costs of bringing this action, as well as such other and additional relief as the Court may determine to be just and proper.

Dated: __________________, 1998

Respectfully Submitted,

DEBRA A. VALENTINE
General Counsel

MICHAEL JOEL BLOOM
Regional Director

RHONDA J. MCLEAN
Assistant Regional Director

____________________________
DENISE V. TIGHE (DT 0175)
Attorney
Federal Trade Commission
150 William Street, Suite 1300
New York, NY 10038
(212)264-3010 (telephone)
(212)264-0459 (facsimile)