California Couple Involved in Credit Repair Scheme Agrees To Post Performance Bond and Pay Consumer Redress To Settle the Charges

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A California couple sued by the Federal Trade Commission over their role in an allegedly deceptive credit repair scheme has agreed to post a $250,000 performance bond before engaging in, or assisting others in, any telemarketing activities in the future. The Commission alleged that Mark Thomas and Gabrielle Ellis, doing business as Universal Credit Corporation (UCC), misrepresented their ability to remove negative information from credit reports and debited consumers' checking accounts without authorization. In addition to the bond requirement, the settlement would permanently ban Mark and Gabrielle Ellis from performing or selling credit repair services or products and would require them to pay $50,000 for consumer redress.

The settlement stems from an FTC complaint filed in federal district court in February 1996. The complaint alleged that the Ellises operated and marketed credit improvement services nationwide, advertising on both television and radio. When consumers called the phone number in the ads, Universal Credit salesperson falsely represented to consumers that: Universal Credit could remove negative information from credit reports regardless of the accuracy or age of the information; consumers who were not satisfied would receive a refund within a reasonable period of time; the company had posted a monetary bond with the appropriate government agencies; and funds from checking accounts would only be withdrawn with the consumer's approval.

Under the proposed settlement of the charges against them, which requires the court's approval to become binding, Mark and Gabrielle Ellis would be permanently barred from selling or performing any credit repair product or service. The settlement would require the Ellises to post a $250,000 performance bond before engaging in, or assisting others, in telemarketing activities. When offering any product or service in the future, the settlement would prohibit the defendants from:

  • misrepresenting that any entity has posted a bond pursuant to statutory requirements;
  • misrepresenting the purpose of requesting information from any consumer regarding their checking, charge or credit account;
  • misrepresenting the availability of refunds to consumers who are dissatisfied with the results obtained by the services of any entity;
  • misrepresenting any fact material to a consumer's decision to purchase any product or service from any entity;
  • failing to obtain the consumer's written authorization before submitting a bank draft on a consumer's bank account; and
  • billing any customer's credit card account for any purpose, without first obtaining written authorization from the customer for such billing.

The order would further prohibit the defendants from violating, or assisting others in violating, any provision of the FTC's Telemarketing Sales Rule. The rule prohibits credit repair companies from soliciting payment until they’ve fulfilled their promises to clean up consumers’ credit reports. The order would require the defendants to monitor salespeople and other employees to check that they are complying with the FTC's order, terminate those who violate the orders, and investigate and respond to any consumer complaint promptly. The settlement would also prohibit the Ellises from selling their customer lists.

Further, the settlement would require the defendants to pay the $50,000 judgment within 90 days. The funds will be set aside for consumer redress, if distribution is practicable. The order also gives the FTC the right to reopen the case in the event the Ellises misrepresented their financial condition.

Finally, the settlement includes various reporting requirements necessary to assist the FTC in monitoring the Ellises’ compliance.

The Commission vote to file the stipulated final judgment for permanent injunction was 5-0. The proposed settlement was filed in U.S. District Court for the Central District of California, in Los Angeles, on December 13, 1996.

NOTE: This final judgment is for settlement purposes only and does not constitute an admission by the defendant of a law violation. Final judgments have the force of law when signed by the judge.

The FTC has published, free of charge, a consumer brochure titled "Credit Repair Scams" which describes how to spot this type of fraud and suggests how consumers can check and correct mistakes in their credit reports. Copies of the brochure, the final judgment and other documents associated with this case, are available from the FTC’s Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 202-326-2502. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710 FTC news releases and other materials also are available on the Internet at the FTC’s World Wide Web site at:


(Civil Action No. 96-114-LHM(EEx))


Contact Information

Media Contact:
Brenda Mack or Howard Shapiro
Office of Public Affairs
202-326-2182 or 202-326-2176
Staff Contact:
Ann Jones or Raymond E. McKown
Los Angeles Regional Office
11000 Wilshire Blvd., Suite 13209
Los Angeles, California 90024