UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF OHIO
EASTERN DIVISION

FEDERAL TRADE COMMISSION, Plaintiff,

v.

DONNA PAYNE, individually and doing business as STRATEGIC INFORMATION SERVICES, Defendant.

CIVIL NO.

COMPLAINT FOR INJUNCTIVE AND OTHER EQUITABLE RELIEF

Plaintiff, the Federal Trade Commission ("FTC" or "Commission") for its Complaint alleges:

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 defendant's deceptive acts or practices in connection with the sale and offering for sale of credit repair products in violation of Section 5(a) of the FTC Act, 15 U.S.C.  45(a), and Section 404(a)(2) of the Credit Repair Organizations Act, 15 U.S.C. 1679b(a)(2).

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 is proper under 28 U.S.C.  1391 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 Donna Payne is an individual doing business as Strategic Information Services, with her office and principal place of business located at 439 Bertram Avenue, Mansfield, Ohio. Defendant transacts or has transacted business in this District. At all times material to this complaint, acting alone or in concert with others, she has formulated, directed, controlled or participated in the acts and practices of Strategic Information Services, including the acts and practices set forth in this complaint.

COMMERCE

6. At all times relevant to this complaint, Defendant has maintained a substantial course of trade in the offering for sale and selling of credit repair products, in or affecting commerce, as "commerce" is defined in Section 4 of the FTC Act, 15 U.S.C.  44.

DEFENDANTS' BUSINESS PRACTICES

7. Since at least April 1998, Defendant has advertised, promoted, offered for sale, and sold credit repair products to consumers through the use of the Internet.

8. Defendant has claimed that she can assist consumers in establishing new credit files by providing consumers with new Taxpayer Identification Numbers ("TIN's").

9. Typical and illustrative of Defendant's claims about their credit repair products include the following:

Bad Credit? Bankruptcy? Divorce?

If you have bad credit -or- are not able to get Credit Cards, Loans, etc. because of Negative information that is in your credit report and want to do something about it, you have come to the right place! We have put this process together in a kit called the

"GUIDE TO A NEW CREDIT FILE".

It shows you the step by step [sic] to creating a new credit file. It shows you the centers to obtain a new taxpayer I.D. number that you can use for credit. It shows you how to clean up your present credit file if you so desire and how to obtain a new social security number. The guide also comes with the form for your new number and the credit bureaus [sic] forms for repairing your present credit file if you so desire.

* * *

WHAT CAN WE DO FOR YOU?

Our promise to you is very simple: If you follow our program, you will have a brand new credit file in less than 30 days. This new credit file will not have any of your present negatives in it. It is simple, it is legal, and inexpensive. Fully guaranteed.

* * *

OBTAIN A T.I.N. NUMBER OR CHANGE YOUR SOCIAL SECURITY NUMBER

Because your file I.D. number is your social security number, if you obtain a new tax payer [sic] I.D. number or change your ss#, you can use it to open a completely brand new credit file. This new credit file will not contain any of your present negatives. Whether you have charge-offs, bankruptcies, foreclosures, slow pays or repossessions, it will not appear on your new credit file. Obtaining your new taxpayer I.D [sic] number is one of the 3 steps you must take to make your file effective. The I.R.S. will give you this number FREE. Or you can change your SS#. We will show you how. You must obtain a taxpayer I.D. number that is 9 digits and within the social security series to be sure that nobody else is using that number. Only 6 centers across the country can give you this number. The guide will show you the right centers to use and the other steps you must take. You can also obtain your number over the phone. The guide will show you how. The guide will also show you how to change your social security number if you prefer. Get all the info you need. It is worth the price.

Defendants charge $29.95 plus $3 for their product.

VIOLATIONS OF THE CREDIT REPAIR ORGANIZATIONS ACT

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

11. Section 404(a)(2) of the Credit Repair Organizations Act prohibits all persons from making any statement, or counseling or advising any consumer to make any statement, the intended effect of which is to alter the consumer's identification to prevent the display of the consumer's credit record, history, or rating for the purpose of concealing adverse information that is accurate and not obsolete to any consumer reporting agency, as defined in 15 U.S.C.  1681(f), or to any person who has extended credit to the consumer or to whom the consumer has applied or is applying for an extension of credit. 15 U.S.C.  1679b(a)(2).

12. Pursuant to 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).

COUNT ONE

13. In numerous instances, defendant has made statements to consumers or counseled or advised consumers to make statements, the intended effect of which has been to alter the consumer's identification to prevent the display of the consumer's credit record, history, or rating for the purpose of concealing adverse information that is accurate and not obsolete to consumer reporting agencies, as that term is defined in 15 U.S.C.  1681(f), or to persons who have extended credit to those consumers or to whom those consumers have applied or are applying for extensions of credit.

14. Defendant has thereby violated Section 404(a)(2) of the Credit Repair Organizations Act, 15 U.S.C.  1679b(a)(2).

VIOLATIONS OF THE FEDERAL TRADE COMMISSION ACT

COUNT TWO

15. In connection with the advertising, marketing, promotion, offering for sale, or sale of credit repair products, to induce consumers to purchase their products defendant has, expressly or by implication, represented that through the use of his products, consumers can legally alter their identifications to conceal adverse credit information from consumers' credit records, credit histories, or credit ratings by obtaining Taxpayer Identification Numbers ("TIN") or alternative Social Security Number Numbers to use, instead of their Social Security Numbers, for credit purposes.

16. In truth and in fact, through the use of defendant's products, consumers cannot legally alter their identifications to conceal adverse credit information from their credit records, credit histories, or credit ratings by obtaining TINs or alternative Social Security Number to use, instead of their Social Security Numbers, for credit purposes.

17. Therefore, the representation set forth in paragraph 14 is false and misleading and constitutes a deceptive act or practice in or affecting commerce, in violation of Section 5(a) of the FTC Act, 15 U.S.C. 45(a).

CONSUMER INJURY

18. Consumers throughout the United States have suffered or are likely to suffer substantial monetary loss as a result of defendant's unlawful acts or practices. Absent injunctive relief by this Court, defendant is likely to continue to injure consumers and harm the public interest.

THIS COURT'S POWER TO GRANT RELIEF

19. 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 defendant's 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 defendant's unlawful acts or practices, and other remedial measures.

PRAYER FOR RELIEF

WHEREFORE, plaintiff requests that this Court, as authorized by Section 410(b) of the Credit Repair Organizations Act, 15 U.S.C.  1679h(b), Sections 13(b) and 19 of the FTC Act, 15 U.S.C.  53(b) and 57b, and pursuant to its 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 defendant 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 products or services;

(c) Award such relief as the Court finds necessary to redress injury to consumers resulting from defendant's 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 ill-gotten 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:_____________, 1999 Respectfully Submitted,

DEBRA A. VALENTINE
General Counsel

__________________________________
GERALD C. ZEMAN (Ohio Bar No. 0055386)
(216) 263-3429
Federal Trade Commission
Eaton Center--Suite 200
1111 Superior Avenue
Cleveland, Ohio 44114-2507

EMILY M. SWEENEY
United States Attorney
Northern District of Ohio

By:

ALEX ROKAKIS (Ohio Bar No. 0029078)
Assistant U.S. Attorney
1800 Bank One Center
600 Superior Ave., East
Cleveland, Ohio 44114
(216) 622-3673
Attorneys for Plaintiff