"Credit Repair" Telemarketer Settles FTC Charges

Claims To Remove Bankruptcy, Tax Liens, Forclosures Were False

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A California telemarketer has agreed to settle Federal Trade Commission charges that claims about his "credit repair" capability were false and that he violated the FTC's Telemarketing Sales Rule. Steven Spence, president of USA Credit Services, promoted his services by claiming that he could remove negative information from consumers' credit reports, even if the information was accurate and timely. In telephone solicitations, Spence sought payment for services before they were rendered -- a violation of the Telemarketing Sales Rule. The settlement of the FTC charges will bar Spence from the deceptive practices and will require that he provide documents to customers that state, "You have no legal right to have accurate information removed from your credit bureau file. . .," among other disclosures.

Spence and USA Credit are located in Carlsbad, California and have a Mesa, Arizona satellite operation.

USA Credit Services was targeted as part of Operation Payback, a joint federal-state crackdown on fraudulent credit repair telemarketers. In April 1996, the United States District Court for the Southern District of California issued a temporary restraining order and an asset freeze, and appointed a temporary receiver, pending trial, at the request of the FTC.

To settle the FTC charges, Spence will be barred from misrepresenting:

  • that he can substantially improve consumers' credit reports;
  • that he can remove bankruptcies, tax liens, foreclosures, late payments, charge-offs, collection accounts, even when the information is accurate and timely;
  • the rights or remedies available to consumers under the Fair Credit Reporting Act.

The settlement also bars violations of the Telemarketing Sales Rule, which prohibits credit repair telemarketers from asking for any money until six months after they deliver their services.

In addition, the settlement would require that Spence provide a notice to clients stating,


"WARNING. DON'T SIGN UP FOR CREDIT IMPROVEMENT SERVICES UNTIL YOU READ THIS NOTICE: You have no legal right to have accurate information removed from your credit bureau file. Under the Fair Credit Reporting Act, the credit bureau generally removes negative information from your report only if it is over seven (7) years old. Bankruptcy generally can be reported for ten(10) years. . . ."

Finally the settlement contains record keeping provisions to allow the agency to monitor compliance.

The Commission vote to accept the proposed consent judgment was 5-0.

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

Copies of the complaint, consent and a consumer education brochure "Credit Repair: How to Help Yourself" 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 1-866-653-4261. 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: http://www.ftc.gov (no period).

FTC File No. X960 068)
(Civil Action No. 96-6399 J (LSP))

Contact Information

Media Contact:
Claudia Bourne Farrell
Office of Public Affairs
Staff Contact:
Monica Tait or Ann Jones
Los Angeles Regional Office
11000 Wilshire Boulevard, Suite 13209
Los Angeles, California 90024