The Federal Trade Commission recently found a Texas-based credit repair company in violation of The Credit Repair Organizations Act, which protects both individual consumers and the integrity of the credit reporting system. In a complaint filed on October 2011, the Federal Trade Commission found that the credit repair company known as RMCN, was charging customers up-front fees for a 6 month program in a effort to improve consumers credit ratings. Other violations include making false statements to credit bureaus and disputing the accuracy of negative information in consumers’ credit reports. Letters were sent to credit bureaus designed to appear as if they were written by consumers, but which RMCN did not show consumers. The firm typically disputed all negative information in credit reports, regardless of the information’s accuracy. RMCN also falsely told consumers that federal law allowed it to dispute accurate credit report information, and that credit bureaus must prove the dispute to be true or remove it from the credit report. It also charged consumers up to $2,000 before providing any service.
The husband and wife team for RMCN agreed to settle Federal Trade Commission charges. The court order settling the FTC’s complaint for civil penalties, which was filed by the U.S. Department of Justice, bars the defendants from similar conduct in the future, imposes a $2.35 million civil penalty, and requires them to pay $400,000. Finally, for 10 years the company must submit reports to the FTC to ensure it is complying with the terms of the order.
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