False statements to credit bureaus: Nothing to CROA 'bout

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It’s called CROA – the Credit Repair Organizations Act – and it was put in place to protect people battling their way back from financial adversity.  Given the long history of questionable practices in this sector, CROA makes it illegal to charge people upfront before services are rendered.  It also bans misleading statements to credit bureaus about consumers’ credit records.  There’s been lots of talk about the harm posed by false negative information in credit reports.  But in an interesting twist, the FTC’s settlement with RMCN Credit Services – one of the largest credit repair outfits in the country – alleges that the company charged illegal fees to deceptively challenge truthful negative information in those reports.

Texas-based RMCN advertised online and in radio and billboard ads across the country.  RMCN representatives typically told consumers that the company would dispute all “derogatory information” on their credit reports, including the accurate stuff.  RMCN assured customers its tactics were on the up-and-up and that federal law required credit bureaus to “prove it or remove it.”

Before the company provided any services, consumers had to pay a “retainer” of between $900 and $2000 and an additional monthly fee of $100 or so for a six-month program.  RMCN then sent more than a million dispute letters to creditors and credit bureaus, challenging the accuracy of pretty much all negative information on clients’ credit reports, regardless of whether there was any factual basis for questioning the accuracy.  In many cases, when challenging the information, RMCN offered a laundry list of fictitious reasons unrelated to the facts of the particular case.

What’s more, the company made it look like the letters were coming directly from the consumer.  RMCN signed the person’s name and used their return address on all correspondence.  Consumers didn’t know what was going on because RMCN didn’t give them copies of the letters.  And RMCN didn’t let up.  Even after getting detailed paperwork verifying the accuracy of the negative information, the company kept at it until the credit bureau deleted it or the consumer stopped paying RMCN.

The FTC sued the RMCN and its owners in 2011.  The complaint alleged that the defendants violated CROA by charging upfront fees and making a raft of false statements to credit bureaus.

To settle the lawsuit, the defendants have agreed to stop charging advance fees for credit repair services.  Those untruthful or misleading statements to credit bureaus?  They’re banned under the order.  RMCN also has agreed it won’t send letters to credit bureaus or creditors without having consumers review them first.  In addition, the company will send letters to all current customers telling them about the lawsuit and giving them the right to cancel their contracts and owe nothing to RMCN.  The order contains broad protections for future consumers by prohibiting any misrepresentation about the sale of any product or service.

The order imposes a $2.35 million civil penalty, which will be partially suspended based on the defendants’ inability to pay the full amount.  But first, they’ll have to turn over a total of $400,000.

The message for marketers?  First, CROA offers important protections for consumers and lays out clear dos and don’ts for the industry.  If you market credit repair services, now is the time for a compliance tune-up.  Second, as the FTC’s long-standing commitment to enforcing CROA and the Fair Credit Reporting Act makes clear, the touchstone of the system is accuracy.  Whether it’s creditors reporting erroneous or incomplete data, credit bureaus slacking off on their obligation to investigate, or groundless challenges to accurate information, the FTC works toward maximizing the truth.



Do we really need additional government involvement in our lives? Fair dealings by all parties should be the rule of the land NOT further government messing.
Yes, we do because there are so many unethical individuals out there taking advantage of the less fortunate ones while charging them an exhorbitant amount of money. I have no problem with a government dog watch to ensure that everyone is playing by the same rule.

Very Liberal stance.

Wow. Hey I have a bridge for sale,cheap. Call me.

Finally@ Thank you for posting this information.
To keep America strong upholding rights and interests of the common people is important
Thanks for informing us as consumers that these credit repairs company is a fraudulent and seeking monies for their own greedy desires. I had an instinct that they were scamming people out of monies. The person can personal clean up their own credit report and the bureaus has instructions how to carry out the process with their help and guidance's.
There are many legitimate, moral, and legal credit companies out there. Yes, there are scammers just like in any industry that is easy for start-up businesses (doesn't require a lot of capital). A consumer can certainly repair their own credit. But I look at it this way. If my car breaks down, I can research, read, and perform trial and error for days (maybe weeks) to try and fix it or I can take it to a professional mechanic - where they are trained, skilled and have experience. They'll have me on the road in a day or two.
The government shouldn't decide how consumers spend their money. Allow the consumer to vote with their dollar. If a business isn't truly serving the people justly, I'm sure a negative reputation would arise fairly quickly; especially in this day and age of social media.

As a loan manager I see these letters all the time. Even though the credit bureaus will not admit it, every time a dispute is received it "re-awakens" the credit (the good, bad and the ugly). Be careful - BK's fall off after 10 years, Charge-offs and collections after 7 years. Example: Charge-off if 2010 - would fall off in 2017, dispute in 2016, now would fall off in 2023. I laugh at these, because someone with junk credit just keeps junking their credt more. As mentioned by Calmdove, you can resolve your credit issues yourself.

@ BarneyRubble (and others) - Your information is misleading and not accurate.

Just because a person files a dispute, this DOES NOT allow the reporting creditor to extend the time it will remain on the credit report.

The "tactic" that you are making reference to is called "re-aging". It is not legal (in my opinion, please research for yourself) under the Fair Credit Reporting Act.

A charge off in 2010 could possibly be deleted legally before than. It is not the "charge off date" that applies. Actually, it would be the "Date of First Delinquency" (DOFD).

There are MANY factors that come in to play when it comes to dealing with resolving credit issues. Being knowledgeable about the laws would be the first step, however not very many people take the time to READ ALL of the information (let alone want to - It can be very "dry" reading). Additionally, there are more than a FEW that can be applicable.

Nonetheless, the option to retain a honest, LEGAL & COMPLIANT company to assist in one's credit journey, is still a good option for some who believe the time saved + the education (from providers who TRULY make the effort) + A positive experience/outcome MORE THAN OUTWEIGHS the expense (in most cases). Once again, it depends on the provider chosen.

It all depends on who you chose. To add to the "car mechanic" example given in an earlier post. You can try to learn all about cars (crash course) & do it yourself (and hope you DON'T make a mistake that could ADVERSELY affect your credit score) or hire a professional. Unfortunately, not ALL mechanics (or credit repair organizations) are honest.

I'm glad to be a part of company (opening soon) that holds itself to a higher level of standards by attempting to ensure honesty, moral & ethical obligation, and seeks to be FULLY complaint with ALL applicable laws. We seek to provide consumers with SOME direction where none may exist otherwise. And "transparency" is at the TOP of our list of obligations to our clients and all who seek assistance. Even "self-help". Our goal is to EDUCATE consumers, however as you may well know - Education cost.

I have seen how "credit counseling agencies" operate. As non-profit (501c3) organizations, they ACTIVELY seek donations form the SAME CREDITORS they contact on behalf of their clients (mind you, I believe that would ALSO entitle the creditor to a tax benefit/write-off) !!! Now, I'm not saying it doesn't benefit SOME consumers, but I have always found it difficult to not view the industry as somewhat "hypocritical". It seems like a "conflict of interest", in my opinion.

We hope to educate consumers in as many aspects that we can (or at least point them in the RIGHT direction for their journey !)

In doing so, we may be able to do a small part towards ending "generational poverty" or "economic social classes" altogether !!!

It's our humble mission anyway. To "Pay It Forward", if you will.

Did you ever open up your credit repair business? If so what is the name of it and where are you located?
I like the fact that you are being transparent with your clients.
The thing that I do not agree with is showing the customers the letters you are sending. In the letter their is proprietary information that you are using, they are seeing the verbiage that you are using which is succeeding in the getting derogatory items removed from their credit reports.
Does Mc Donalds have to put their secret sauce recipe on their package?
No so Credit Repair businesses should not have to show the full document to the customers which hired them.

There is nothing fraudulent about credit repair. The law has many loopholes and lawyers and judges use them to their own benefit daily for their own profits. SO you can represent yourself in the court as your right... or would you rather hire someone who knows their way around a little bit..

Have fun!

That is completely false. There is no "re-awakening". Only payments can re toll a debt by changing the date of last activity. Disputing something is allowed by law and isn't a date change for last activity. Anyone can dispute something themselves usually nowadays they waive their consumer rights as the bureaus are as sly as foxes with their expedited dispute process which is activated with online disputes which is why online disputes result in reinsertions much of the time. And collections stay for 7 1/2 years. Not all BKs are off in 10 years, 13's are off in 7 years from the date of completion. c

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