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Understanding Credit Repair Fraud

While there are some very good and reputable credit repair companies, you should not rule out the possibility of credit repair fraud. Here are some tips to help you distinguish the cons from the pros.

How to Recognize Credit Repair Fraud

Here’s a quick list of things that fraudulent credit repair companies may do, and things that you will have to watch for to keep your money safe.

  • They don’t provide you with a copy of the Consumer Credit File Rights Under State and Federal Law.
  • The contract doesn’t include the amount they are charging, and it does not include the services they offer, or the name and address of their company.
  • If they ask you to sign anything that waives your rights, they are not an honest company.
  • If they tell you that they can provide you with a new Social Security Number, they are breaking the law.

The above are some of the things that many fraudulent companies are trying today, and they are getting away with because many consumers are desperate and trust what they have to say.

What Should Credit Repair Companies Offer?

Credit repair companies can provide legitimate value, but you have to tread lightly.

  • They will not ply the customer with promises of an overnight fix.
  • They will provide realistic goals and give customers a realistic timeframe as to how long it will take to repair damaged credit.

Your Credit Repair Rights

The Credit Repair Organization Act (CROA) makes it illegal for credit repair companies to lie about what they can do for you, and to charge you before they’ve performed their services. This law, which is enforced by the Federal Trade Commission, requires credit repair companies to explain:

  • your legal rights in a written contract that also details the services they’ll perform
  • your three day right to cancel without any charge
  • how long it will take to get results
  • the total cost you will pay
  • any guarantees

What to do if a credit repair company isn’t providing services as expected

If your credit repair company turned out to be a dump and run (with your money), or if they aren’t living up to your agreed upon deal, there are a few actions you can take

  • You can sue them in federal court for your actual losses or for what you paid them, whichever is more
  • You can seek punitive damages — money to punish the company for violating the law
  • You can join other people in a class action lawsuit against the company, and if you win, the company has to pay your attorney’s fees

If you have any questions, please don’t hesitate to contact us anytime, or post in our free support forum

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