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The Federal Trade Commission, U.S. Postal Inspection Service (USPIS), and eight state law enforcement agencies today announced a crackdown on 20 operations that deceptively claim they can remove negative information from consumers’ credit reports – even if that information is accurate and timely.

“Credit repair schemes are a big problem for consumers,” said Eileen Harrington, Deputy Director of the FTC’s Bureau of Consumer Protection. “Credit repair promoters generally charge hundreds of dollars, but don’t deliver on their claims. The fact is, they can’t. No one can legally remove accurate and timely information from your credit report.”

The FTC began coordinating “Project Credit Despair” last year in response to thousands of consumer complaints, which it shared with the USPIS, the State of Louisiana Office of Financial Institutions, and other state law enforcement agencies. The cases involved companies throughout the nation, many of which promised to remove accurate and timely information from consumers’ credit reports, and typically charged hundreds of dollars in advance for the service.

According to the FTC, Bad Credit B Gone, LLC and its principal, Joseph A. Graziola III, made promises such as “the credit you always dreamed of!” and “If we fail to remove any negative credit from your reports, we’ll give you a refund plus $100.” Referring to “charge-offs, collections, tax liens, bankruptcies, repossessions, student loans, child support, late payments, and judgments,” they claimed, “On average, 80 percent of the derogatory information is deleted off your credit report within . . . three months.” The Philadelphia-based company charged $500 per individual and $700 per couple for its services, half of which was due up-front.

The FTC charged Bad Credit B Gone with violating the FTC Act by making false or misleading statements, such as claiming they can improve most consumers’ credit reports substantially and permanently by removing negative information that is accurate and not obsolete. The defendants also allegedly violated the Credit Repair Organizations Act (CROA) by requiring advance payment for credit repair services and by making false or misleading statements. The FTC is seeking to bar them permanently from further violations, to require them to return money to consumers, and to give up their ill-gotten gains.

“We have two goals with this announcement,” Harrington said. “One is very specific. It is to stop Bad Credit B Gone’s deceptive practices, and force them to return their ill-gotten gains to consumers. The other is broad. It is to put other credit repair firms on notice that we are on the beat, and it is to alert consumers that there is absolutely no reason to pay for credit repair – ever. Despite their claims, there is nothing that any credit repair firm can do for you for a fee that you cannot do for yourself at little or no cost.”

In another FTC action involving credit repair:

  • In the matter of Cornerstone Wealth Corporation of Dallas, Texas, doing business as Credit Financial Services, and its principal, John Atchley, Jr., the FTC has asked the court to issue a contempt citation for alleged violations of a previous court order.

Law enforcement initiatives also were taken by the Office of the Attorney General for the State of Tennessee, Office of the Attorney General for the State of Ohio, Office of the Attorney General for the State of California, Office of the Attorney General for the State of Arkansas, Office of the Attorney General for the State of Illinois, Office of the Attorney General for the State of Florida, Office of the Attorney General for the Commonwealth of Kentucky, and the State of Louisiana Office of Financial Institutions.

Advice for Consumers
How can you avoid turning credit repair into credit despair? Here are a few suggestions:

  • Avoid any company that wants you to pay for credit repair services before they provide any services. It is against the law.
  • Avoid any credit repair company that will not tell you your legal rights and what you can do, yourself, for free.
  • Avoid any credit repair company that tells you not to contact a credit reporting company directly.
  • Avoid any credit repair company that advises you to dispute all of the information in your credit report.
  • Avoid any company that suggests creating a “new” credit identity – and then, a new credit report – by applying for an Employer Identification Number to use instead of your Social Security number. That is against the law. If you follow illegal advice and commit fraud, you also may be subject to prosecution.

The FTC advises that only time, a conscious effort, and a personal debt repayment plan can improve your credit report. The first step is to learn what information is in your credit report. If you find errors or mistakes, federal law gives you the right to have them corrected – free of charge.
Federal law requires that the nationwide consumer reporting companies – Equifax, Experian, and TransUnion – provide you with a free copy of your credit report once every 12 months, if you ask for it. To order your free report, visit, call 1-877-322-8228, or complete and mail the Annual Credit Report Request Form. Other credit repair information is available on the FTC’s Web site,

If you think you might have paid a company to repair your credit, contact the FTC. You can file a complaint at or by calling 1-877-FTC-HELP. You can also ask for free information about recognizing credit repair scams and building a better credit record.

The Commission vote to authorize staff to file the complaint against Bad Credit B Gone, LLC was 4-0. The complaint was filed in U.S. District Court for the Northern District of Illinois, Eastern Division, in Chicago, which granted a temporary restraining order and asset freeze.

NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant has actually violated the law. The case will be decided by the court.

Copies of the complaint are available from the FTC’s Web site at and from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint in English or Spanish (bilingual counselors are available to take complaints), or to get free information on 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

Contact Information

Media Contact:
Claudia Bourne Farrell,
Office of Public Affairs

Frank Dorman,
Office of Public Affairs

Staff Contact:

C. Steven Baker,Director,
Midwest Region Office

William J. Hodor,
Midwest Region Office