| DEBRA A. VALENTINE General Counsel MICHAEL J. BLOOM (MB 7732) UNITED STATES DISTRICT COURT FEDERAL TRADE COMMISSION, Plaintiff, CIVIL ACTION NO. v. FIGHTING BACK, INC. (a/k/a FIGHTING ) BACK CONSULTANTS, INC., FIGHTING BACK CO., FIGHTING BACK CREDIT COMPANY, and WILLIAM S. LICATA, individually and as an officer of FIGHTING BACK, INC., Defendants. COMPLAINT FOR INJUNCTIVE AND OTHER EQUITABLE RELIEF Plaintiff, the Federal Trade Commission ("FTC" or "the Commission"), for its complaint, alleges as follows: 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 defendants’ deceptive acts or practices in connection with the sale and offering for sale of credit repair services in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), and the Credit Repair Organizations Act , 15 U.S.C. § 1679 et seq. 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 in this district is proper under 28 U.S.C. §§ 1391(b) and (c), 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 Fighting Back, Inc. (a/k/a Fighting Back Consultants, Inc., Fighting Back Co., and Fighting Back Credit Company) ("Fighting Back" or “Company”) is a New York business entity with its principal place of business located at 230 East 29th Street, New York, NY 10016. The corporate defendant also maintains addresses at 127 East 59th Street, Room 201, New York, NY 10022; 1162 St. Georges Avenue, Suite 193, Avenel, NJ 07001; and 6342 Forest Hill Boulevard, Suite 301, West Palm Beach, Fl. 33415. Fighting Back has transacted business in the Southern District of New York. 6. Defendant William S. Licata ("Licata"), is an officer, director, and/or principal owner of Fighting Back, Inc. which sells credit repair services to the public. At all times material to this complaint, individually or in concert with others, Licata formulated, directed, controlled, or participated in the acts and practices of the corporate defendant, including the acts and practices set forth in this complaint. He has transacted business in the Southern District of New York. COMMERCE 7. At all times relevant to this complaint, defendants have maintained a substantial course of trade in the offering for sale and selling of credit repair services, in or affecting commerce, as “commerce” is defined in Section 4 of the FTC Act, 15 U.S.C. § 44. DEFENDANTS' BUSINESS PRACTICES 8. Since at least 1985, defendants advertised, promoted, offered for sale, and sold credit repair services to consumers throughout the United States. 9. Defendants offer two types of credit repair services: "credit repair" and "file segregation" to consumers for the claimed purpose of getting consumers who have had credit problems "out of [their] present credit crunch" so that they can "get back into the credit system and obtain the credit they need." 10. Through Company representatives and Company brochures given to consumers, defendants have offered "credit repair" services to consumers purporting to permanently remove accurate, nonobsolete derogatory information from, or improve, consumers' credit histories, credit records, and credit ratings. Defendants claim to permanently remove judgments, late payments, charge-offs, repossessions, tax liens, collection accounts, bankruptcies, foreclosures, unpaid student loans, and other negative information from consumers' credit reports, even where such information is accurate and nonobsolete. 11. Typical and illustrative of defendants’ representations about their "credit repair" services are the following:
12. Before providing any of the promised "credit repair" services, defendants’ representatives and Company brochures request and obtain at least partial payment for these services. Defendants have typically charged an initial fee for "credit repair" of $395, with three additional payments of $200, for a single person, and an initial fee of $595, with four additional payments of $250, for a couple, totaling between $995 and $1,595 respectively. 13. Defendants have offered a second type of credit repair service to consumers, referred to as "file segregation" representing that they can improve consumers’ credit histories, credit records, and credit ratings by assisting them in establishing new credit files or credit identities to be used for credit purposes. Defendants inform consumers that they will obtain, in about ten (10) to thirty (30) days, Employer Identification Numbers ("EIN") or Taxpayer Identification Numbers ("TIN") from the federal government on consumers’ behalves. Consumers are then to use this newly obtained EIN or TIN, instead of their social security numbers, for credit purposes. The purported result of the "file segregation" service is to conceal any adverse credit information consumers have in their files with the credit reporting agencies. 14. Typical and illustrative of defendants’ representations about their "file segregation" services are the following:
15. Before providing any of the promised "file segregation" services, defendants’ representatives and Company brochures request and obtain full payment for these services. Consumers have agreed to purchase defendants’ services based on these representations. Defendants have typically charged $375 for a single person, and $750 for a couple for "file segregation" services. THE CREDIT REPAIR ORGANIZATIONS ACT 16. The Credit Repair Organizations Act, 15 U.S.C. §§ 1679a-j (1997), was enacted on September 30, 1996 to take effect six months after enactment. The Act has been in full force and effect since April 1, 1997. 17. Defendants are "credit repair organizations" as that term is defined in the Credit Repair Organizations Act, 15 U.S.C. § 1679a(3). 18. The purposes of the Credit Repair Organizations Act, according to Congress, are:
19. Section 404(a)(3) of the Credit Repair Organizations Act prohibits all persons from making or using any untrue or misleading representation of the services of the credit repair organization. 15 U.S.C. § 1679b(a)(3). 20. Section 404(b) of the Credit Repair Organizations Act prohibits credit repair organizations from charging or receiving any money or other valuable consideration for the performance of any service which the credit repair organization has agreed to perform before such service is fully performed. 15 U.S.C. § 1679b(b). 21. Pursuant to Section 18(d)(3) of the FTC Act, 15 U.S.C. § 57(d)(3), and 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). VIOLATIONS OF THE CREDIT REPAIR ORGANIZATIONS ACT COUNT ONE 22. In connection with the performance of services for consumers by a credit repair organization, as that term is defined in Section 403(3) of the Credit Repair Organizations Act, 15 U.S.C. § 1679a(3), defendants have made untrue or misleading representations to induce consumers to purchase their "credit repair" and/or "file segregation" services, including, but not limited to:
23. In truth and in fact, defendants cannot:
24. Defendants have thereby violated Section 404(a)(3) of the Credit Repair Organizations Act, 15 U.S.C. § 1679b(a)(3). COUNT TWO 25. In connection with the performance of services for consumers by a credit repair organization, as that term is defined in Section 403(3) of the Credit Repair Organizations Act, 15 U.S.C. § 1679a(3), defendants have charged or received money or other valuable consideration for the performance of "credit repair" and/or "file segregation" services that defendants have agreed to perform before such services were fully performed. 26. Defendants have thereby violated Section 404(b) of the Credit Repair Organizations Act, 15 U.S.C. § 1679b(b). SECTION 5 OF THE FTC ACT 27. Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), provides that “unfair or deceptive acts or practices in or affecting commerce are hereby declared unlawful.” 28. Misrepresentations of material fact constitute unfair or deceptive acts or practices prohibited by Section 5(a) of the FTC Act. VIOLATIONS OF SECTION 5 OF THE FTC ACT COUNT THREE 29. In connection with the advertising, marketing, promotion, offering for sale, or sale of credit repair services, defendants have made untrue or misleading statements to induce consumers to purchase their services, including, but not limited to, the representation that defendants can improve substantially most consumers’ credit reports or profiles by permanently removing judgments, late payments, charge-offs, repossessions, tax liens, collection accounts, bankruptcies, foreclosures, unpaid student loans, and other negative information from consumers' credit reports, even where such information is accurate and not obsolete. 30. In truth and fact, defendants cannot improve substantially most consumers’ credit reports or profiles by permanently removing judgments, late payments, charge-offs, repossessions, tax liens, collection accounts, bankruptcies, foreclosures, unpaid student loans and other negative information from consumers' credit reports, where such information is accurate and not obsolete. 31. Therefore, defendants’ representations are false and misleading constituting unfair and deceptive acts or practices in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a). COUNT FOUR 32. In connection with the advertising, marketing, promotion, offering for sale, or sale of credit repair services, defendants have, directly or by implication, made representations to induce consumers to purchase their services that defendants can legally alter consumers’ identification to conceal adverse credit information from consumers’ credit records, credit histories, or credit ratings by obtaining Employer Identification Numbers ("EIN") or Taxpayer Identification Numbers ("TIN") for consumers to use, instead of their social security numbers, for credit purposes. 33. In truth and in fact, defendants cannot legally alter consumers’ identifications to conceal adverse credit information from consumers’ credit records, credit histories, or credit ratings by obtaining EINs or TINs for consumers and having consumers use the EINs or TINs instead of their social security numbers. 34. Therefore, defendants’ representations are false and misleading constituting unfair and deceptive acts or practices in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a). CONSUMER INJURY 35. Consumers have suffered or are likely to suffer substantial monetary loss as a result of defendants’ unlawful acts or practices. Absent injunctive relief by this Court, defendants are likely to continue to injure consumers and harm the public interest. THIS COURT'S POWER TO GRANT RELIEF 36. 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 defendants’ 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 defendants’ unlawful acts or practices, and other remedial measures. PRAYER FOR RELIEF WHEREFORE, Plaintiff respectfully requests that this Court, as authorized by Sections 13(b) and 19 of the FTC Act, 15 U.S.C. §§ 53(b) and 57b, and pursuant to this Court’s own equitable powers:
Dated: __________________, 1998 Respectfully Submitted, DEBRA A. VALENTINE MICHAEL JOEL BLOOM RHONDA J. MCLEAN ____________________________ |