Attorney General Bill McCollum News Release
March 4, 2009
Media Contact: Jenn Meale
Phone: (850) 245-0150
en EspañolPrint Icon Print Version

McCollum: Credit Repair, Debt Elimination Schemes Common Topics of Florida Complaints

~ Consumers warned against "Too good to be true" schemes during National Consumer Protection Week ~


TALLAHASSEE, FL – Attorney General Bill McCollum today issued a consumer advisory as part of National Consumer Protection Week warning Floridians about credit repair and debt relief scams, one of the most common categories of complaints reported to the Attorney General’s Office last year. The number of complaints about these types of services exceeded 5,300 in 2008, and the Attorney General speculated that disreputable companies and individuals will continue to try capitalizing on the current economic climate and consumers’ credit and debt worries.

“As Floridians turn to debt relief organizations for help, an increasing number of these companies are taking advantage of the nationwide financial situation and defrauding consumers,” said Attorney General McCollum. “The Attorney General’s Office will continue aggressively pursuing companies and individuals who are preying on our consumers in their times of desperation.”

Credit repair schemes are just one type of the broader class of debt relief schemes which prey on consumers in financial distress. Claims to improve credit or eliminate bad credit are sometimes part of other operations claiming to negotiate or eliminate debt. Consumers need to be cautious of firms offering debt relief, including debt management, credit counseling, and credit card rate reduction services. Often, the company’s goal is to get the consumer’s money, with no real benefit provided to the consumer in return. Consumers should be aware that credit repair companies are not permitted to charge upfront fees.

Some credit or debt repair schemes offer to “hide” bad credit by helping consumers establish a new credit identity. The company may direct the consumer to apply for an Employer Identification Number (EIN) from the Internal Revenue Service, and to use the EIN in place of his or her Social Security number when applying for credit. This practice, known as file segregation, is a federal crime.

To avoid these and other credit repair scams, Attorney General McCollum offered the following tips for consumers who may be considering credit repair services:

- Contact creditors if scheduled payments will be missed and ask local credit counseling services to develop payment plans. These nonprofit groups offer credit guidance to consumers and their services are available at little or no cost. Your employer, credit union, or housing authority may also offer other no-cost credit counseling programs.

- Request a copy of your credit report and review it for mistakes. You are entitled to a free copy of your credit report if you've been denied credit, insurance or employment and request the report within 60 days of notice, or if you can prove that (1) you're unemployed and plan to look for a job within 60 days, (2) you're on welfare, or (3) your report is inaccurate because of fraud. Otherwise, the credit bureaus may charge you a small fee for a copy of your credit report.

- If there are mistakes on your credit report, contact the credit bureau and request a dispute form. Submit the form with as much information as possible about the inaccurate information. The bureau must reinvestigate the matter and delete or correct any information which they are unable to verify. If the dispute still exists, consumers can file a written explanation which must be included in the credit report.

- Contact the Attorney General's Office at 1-866-966-7226 or online at http://www.myfloridalegal.com to determine if there are complaints or legal actions pending against the company you are considering.

The Attorney General reminded consumers that they are entitled to one free credit report every 12 months, available at https://www.annualcreditreport.com/cra/index.jsp, and should beware of companies that offer quick solutions for clearing bad credit. Credit repair companies claiming they can remove negative information from a credit report are not being honest. Accurate information within seven years of the reporting period, or 10 years if the information relates to a bankruptcy, cannot be erased from a credit report. The only information that can be changed are items that are actually wrong or are after the reporting date.

Consumers should exercise caution when selecting a debt relief program. Many debt relief services do provide legitimate services and can help consumers reduce the negative effects of debt. More information is available online at: http://myfloridalegal.com/pages.nsf/Main/8C5B6B26667BE41485256EC2004D3252!Open

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