Posts Tagged ‘fee’

Don’t let yourself be taken by shady credit repair offers

October 25th, 2008

This economy is causing consumers with credit issues to become more desperate and seek out quick fixes to their credit problems rather than do the real work needed to clean up credit issues. We’ve been educating consumers on line since 1995 about do it yourself credit repair, and more than ever, consumers should be very careful when choosing a credit repair company to help clean up their credit.

Credit repair agencies are legal but they must follow certain laws to make sure they comply.  A credit repair company who is promising all sorts of major changes to your credit reports should be avoided. A credit repair company has to follow the Credit Repair Organizations Act (CROA) and they cant charge you in advance for work they have yet to do, nor can they make exaggerated claims of guaranteed removals.

This week we told you about the latest crackdown by the FTC against these shady offers and according to the L.A Times, a credit repair company based in Woodland Hills California has been targeted by the FTC for violating such laws.  Success Credit Services was accused in an FTC civil suit of violating the Credit Repair Organizations Act by contending that it could quickly clean up credit reports by removing legitimate negative items, such as late payments, bankruptcies and tax liens.

You’d think by now, with all the crackdowns across the nation by the FTC, that credit repair companies would get a clue that they cannot get away with taking our money and doing nothing. They are sitting ducks for groups like the FTC and the Attorneys General. It’s a risk these companies should not be taking.

There’s a reason we decided in 1995 to bring credit education online to consumers nationwide. People were desperate for information about how to clean up their credit reports and not get ripped off in the process. By educating you to do the work yourself, you are going to not only save money but you’ll be sure to stay in control of exactly what is being done along the way. A shady credit repair company CAN make your credit worse.

We’ve never wanted to go into the business of fixing your credit for you and there’s a simple reason for that. We feel it’s very possible to do the work yourself by simply following some key educational steps. It’s that simple. Learn to understand the credit industry and how it works and you can take on the task of credit issues yourself. With what you learn, you could see dramatic improvements in your credit reports and spend next to nothing to do it.

Sure, there are some people that just do not want to undertake the task themselves, and they have the right to hire someone to do it for them, but just realize you are hiring someone to do pretty basic tasks like letter writing and debt negotiating.  What you are paying for is a service to simply do “the steps” you don’t want to bother with. That’s fine. You are paying a “service fee”. Just make sure the company is reputable and I’d recommend checking their record with the BBB (Better Business Bureau), completely reading their terms before you sign anything, and most importantly research them online. You can uncover a lot by reading what past customers have to say about them.

You don’t have to fall victim to these credit correction scams. Choose wisely just as you would choose a bank, mechanic, or mortgage broker. If the service is offering all sorts of exaggerated promises then it’s a pretty sure bet that you are going to get taken. These types of so called “businesses” are just waiting for the desperate buyer.

There is no reason that all rational should fly out the window when choosing a credit repair company. Many of these crackdowns could be avoided all together if consumers would use great caution when dealing with credit repair companies and do their homework. Common sense should prevail and if it doesn’t feel quite right then trust your instinct.

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Going undercover as a debt collector

October 8th, 2008

Fred Williams, a reporter for the Buffalo News, worked for three months at a debt-collection agency to see how one operates. Here is his report,

Ethel, you did this!” Joe barks into the phone, his voice booming through the divider between our desks. Joe is trying to collect a credit-card bill, but Ethel is unaware of the card’s existence — or claims to be. “Stop making excuses!” Joe tells her.

It’s my first week on the job as a debt collector, and already I’m learning a lot. Or rather, unlearning a lot. Everything I know about consumer finance is wrong here.

In this upside-down world, unpaid bills are a boon, not a curse. The bigger, the better. If we collect, the agency gets a bounty of 10% to 50% from the creditor, and it gives us a cut. Top collectors are handed bonuses of $10,000 or more at a monthly assembly, while envious co-workers clap and cheer.

In this world, identity theft isn’t an epidemic. It’s an excuse used by weaseling debtors — like job loss, illness or even the death of a spouse. In the notes we make after each call, these excuses are summed up with the code HLS — hard-luck story.

Joe tells Ethel that he’s looking at her credit report and it doesn’t support her innocence. “This card was paid every month for two years,” he says. “Identity thieves don’t do that!” Maybe he’s right and she’s trying to skip a legitimate bill. Or maybe he’s making it up.

The collection industry gets the most complaints of any industry regulated by the U.S. Federal Trade Commission — more than 300,000 in the past five years. The trade association, ACA International, blames the griping on consumers’ increasing debt burden.

But inside the large, well-established agency where I work, that’s not the whole story. Motivated strictly by cash, collectors manipulate, shame and threaten people into paying, without caring whether the bill is legitimate.

“Get the money!” our team leader exhorts us in a brief morning huddle. Then we hit the phones, making 150 to 200 calls a day. Most are answered by machines or by people who say we’ve got a wrong number.

Debtors are cagey about picking up, so we’re taught to mask the purpose of the call as long as possible. We ask for them casually by first name, like an acquaintance. Outright deception is forbidden, but sometimes my co-workers pose as paralegals or even as “fraud investigators,” to imply that criminal charges are looming.

Once a debtor is on the line, we demand that they pay the overdue balance immediately. But the balance is like the sticker price on a car — a starting point for negotiation. On some accounts, I may offer a settlement that wipes out half the bill. This helps to placate debtors. They’re usually sputtering mad because their actual purchases are a pittance compared with the interest, late fees and over-limit fees they now owe.

If a debtor opts to settle, I am trained to take their application. In a bored voice I ask for their cell-phone number, their spouse’s work phone and so on, as if I’m filling out a form. There’s no application; we get the phone numbers to hound them if their payment falls through.

To help debtors raise money, we are trained to give them financial advice that would make their accountant blanch, if they had one. We suggest that they take money out of their IRA, drain their home equity with a second mortgage, load up a different credit card or even skip a mortgage payment.

If a debtor still won’t pay, we play a version of good cop/bad cop. Two collectors will team up on one call, with one posing as a hard-hearted manager. The other listens patiently and pretends to be sympathetic. The idea is to make the debtor want to please the sympathetic collector, who closes the deal.

Even people like Ethel, who claim to be fraud victims, can be squeezed for cash. We say it was probably their child or someone else in their household who abused the card, and if they don’t call the police, we will.

But Joe loses his battle of wills with Ethel for today when she simply hangs up. Calling her back immediately would violate rules against harassment. I go around the divider to commiserate, and to see whether Ethel’s credit report really implicated her. But Joe has already deleted it from his screen and pulled up another account, preparing to make his next call.

Our group manager has also been listening. “You blew it,” he tells Joe loudly, so the rest of the group can hear. “You should’ve got her to pay.”

Kiplinger’s Personal Finance. Author Fred Williams’s book, Inside Debt Collection, is available at lulu.com.

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Do it yourself credit repair | Easier than you think and cheap!

September 16th, 2008

You can improve your creditworthiness and get legitimate resources for low or no-cost help.

 

You may get calls from telemarketers offering credit repair services.  The Scam, companies’ nationwide, appeal to consumers with poor credit histories and who are desperate. They promise, for a fee, to clean up your credit report so you can get a car loan, a home mortgage, insurance, or even a job. Desperate consumers fall prey to this scam. Remember, if it sounds too good to be true. It is.

 

Some credit repair services get sleazy when they promise to do a job that’s just not possible. Unlimited credit report disputes, corrections, and removals with Equifax, Experian, and TransUnion and guaranteed deletions are just some of the promises you hear.

 

An ethical firm (usually reputable lawyers, not shysters) will not tout miracles, charge you in advance or make false promises. if they do, sooner or later the FTC will find them.

 

Just this past week, a credit repair company was shut down and fined by the FTC for making promises it couldn’t possibly keep, by assuring buyers that they could remove negative accounts even if accurate and for collecting money in advance for work yet to be performed.

 

That’s a key word. Accurate. The foundation of credit repair isn’t an industry trade secret. It’s using the law with your customized disputes to garner the best possible results. Period. 

 

By using existing state and federal laws, you CAN remove negative information from your credit reports. The fundamentals aren’t whether the item is negative or positive. It’s is it accurate.  The FCRA is quite clear on this issue. If it isn’t verifiable or accurate, it cannot remain.

 

It doesn’t matter what your history, background, or credit record is, you’ll be amazed at how simple correction can be. You’ve probably been told that your credit history will stick with you forever, or it takes years to clean up. 

 

While no one can guarantee you a spotless credit record, real credit repair is a worthwhile investment, and if the bureaus, collection agencies, and creditors were doing their job, credit report repair wouldn’t be the top search online.

 

People are desperate because credit reports DO contain lots of errors. Nearly every consumer has an error in at least one credit report from one of the major credit bureaus. Credit bureaus generate your report they receive from your creditors; they don’t verify it… Unless you ask.

 

The simple truth is that the credit bureaus and even furnishers of information must comply with federal law. Doing so isn’t so easy for them. You need to leverage that. It will take time, but it’s a very worthwhile investment.

 

 

Don’t despair.  It’s never too late to become credit worthy – just get started, and remember that it won’t happen overnight and you must commit to doing the work. Doing the work can be justified in how much money you are going to save if you don’t have to hire someone AND in rates if you do have an improved credit report.

 

While I can certainly understand the FTC warning us all to avoid credit repair and scams, what I don’t understand is why they don’t focus a campaign on just how difficult the credit system makes fixing your credit. The bureaus don’t work for us, they make billions and our disputes are a kink in there rhythm. They sort of help us because they have to, not because they want to.

 

So, what ends up happening, is the consumer gets frustrated and seeks out a service to fix their credit for them, and often, it’s a scam.  The FTC moves in, shuts them down, and reminds us that we can do this ourselves. Trouble is, people get lost in the process and the FTC doesn’t tell us that communication with the credit bureaus, debt collectors, and furnishers of information can be a vicious cycle.

 

That’s why it’s important to educate yourself and if you are going to do the work, do some research online. You’ll quickly find there are only a handful a really good , reputable DIY sites and credit repair lawyers.  

 

The highly effective letters that we offer have been proven to WORK in correcting negative items on your credit that may be outdated, obsolete, or inaccurate (unverifiable). When you combine the right letters to cut through the bureaucracy of the credit system, you’ll garner much better results, save money and avoid mistakes that can cause you more trouble and more time. Not to mention, you’ll understand the dangers of dealing with bill collectors without proper knowledge.

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Credit repair website shut down by FTC

September 12th, 2008

FTC Obtains Court Order Against Husband-Wife Credit Repair Team

Here’s a perfect example of why you should never believe when someone tells you that they can guarantee you to remove anything and charge advanced fees for removal of negative items.

The Federal Trade Commission charged two credit repair marketers with violating federal law by collecting advance payment for credit repair services and falsely promising to remove derogatory information from consumers’ credit reports – even if the information is accurate and not obsolete. At the Commission’s request, a federal court halted the defendants’ allegedly unlawful business practices and froze their assets pending further litigation. The FTC seeks to bar the defendants from further violations and make them forfeit their ill-gotten gains.

According to the FTC’s complaint, the defendants marketed their “services” to consumers throughout the nation via an Internet Web site, www.lhcreditrepair.com, classified ads in USA Today, Thrifty Nickel, Common Cents, and www.americanclassifieds.com, and online listings such as www.kellysearch.com and www.aboutus.org. Statements on their Web site include, “Have you had a bankruptcy? We will repair your credit so that this past event does not haunt your future.” Consumers who called the defendants in response to their ads were told, “Anything that hurts you, we’re going to get it off of [your credit report].”

The complaint states that the defendants often led consumers to believe that accurate information on their credit reports might somehow be considered inaccurate and subject to removal. Even when consumers told them that the information was accurate, the defendants led consumers to believe that it could be removed. The defendants allegedly claimed they had special knowledge and expertise that enabled them to permanently remove negative information, including late payments, charge-offs, Collections, tax liens, repossessions, foreclosures, bankruptcies, and judgments, even when the information was accurate and not outdated.

According to the complaint, the defendants offer four levels of service ranging from $250 to $1,150 per person. They require an advance fee they call a deposit, which varies in amount, depending upon the program selected. On their Web site’s home page they claim, without qualification, that “[a]fter we have cleared your files we will stay with you for life, at no additional charge, to catch any other bad files that might show up.” Subsequent Web pages indicate, however, that only one of the four service levels includes the “for life” feature.

The defendants are Rudolph Joseph Strobel, a/k/a Lee Harrison, and Leanna Ruth Harrison, both doing business as Lee Harrison Credit Restoration, Credit Restoration, and Lee Harrison Associates Credit Restoration (LHCR), all located in Naples, Texas. They are charged with violating the credit repair Organizations Act (CROA) and the FTC Act by falsely representing that they can improve consumers’ credit reports by permanently removing negative information, even when the information is accurate and not obsolete. The defendants are also charged with violating the CROA by requiring advance payment for credit repair services; and by failing to provide, before contracts are signed, the written “Consumer Credit File Rights Under State and Federal Law.” In addition, they are charged with violating the CROA by failing to include in their consumer contract a full and detailed description of the services to be performed, including all guarantees of performance and an estimate of the date by which the services will be performed; and failing to include a conspicuous statement about the consumer’s right to cancel the contract without penalty or obligation within three business days after the contract is signed.

The Commission vote to authorize staff to file the complaint was 4-0. The complaint was filed in the U.S. District Court for the Eastern District of Texas, Marshall Division.

Additional credit repair information is available in “Credit Repair: Self-Help May Be Best,” at www.ftc.gov/bcp/conline/pubs/credit/repair.shtm. The FTC advises that only time, a conscious effort, and a personal debt repayment plan can improve your credit report. The first step is to learn what information is in your credit report. If you find errors or mistakes, federal law gives you the right to have them corrected – free of charge. Federal law requires that the nationwide consumer reporting companies – Equifax, Experian, and TransUnion – provide you with a free copy of your credit report once every 12 months, if you ask for it. To order your free report, visit annualcreditreport.com, call 1-877-322-8228, or complete and mail the Annual Credit Report Request Form.

NOTE: The Commission files a complaint when it has “reason to believe” that the law has been
or is being violated, and it appears to the Commission that a proceeding is in the public interest.
The complaint is not a finding or ruling that the defendant has actually violated the law.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,500 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s Web site provides free information on a variety of consumer topics.

MEDIA CONTACT:
Frank Dorman,
Office of Public Affairs
202-326-2674
STAFF CONTACT:
Anne D. Lejeune
FTC’s Southwest Region
214-979-9371
(Lee Harrison Credit Restoration)
(FTC File No. 0823141)

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Debt settlement versus debt management

August 9th, 2008

Being in the credit field, I am always surprised just how many people don’t know the difference between debt management and debt settlement (negotiations).

I talked with a man the other day who had been feverishly searching for a good debt settlement company before he ran out of time, but as I was speaking to him, I realized he didn’t have any money, so how was he going to settle his debts?

Debt settlement also referred to as debt negotiations is a method to settle your debts for less than what you owe. Debt settlement procedures can be very affective IF you know what you are doing and have some money.

When you want to avoid bankruptcy and get out of debt AND you have some money set aside, you can negotiate with your creditors or use a debt negotiator to do it for you.

Often they will offer 30-40% of the total debt to be considered as settled in full. This can cut the debt in half and consider it case closed. That means no more worrying about the creditors coming after you or worrying day and night about being sued or slapped with a judgment.

You must have money to settle your debts, otherwise there is no “debt settlement”.

Many times the creditors will accept this, especially if you are in dire straights and they fear you may file for bankruptcy and they’d be left with nothing.

A professional debt negotiator has long term relationships with many of the creditors and can work a deal for you, for a fee. You still walk away paying less, even with the fee.

Another option to consider would be do it yourself debt negotiations. If you are equipped with knowledge and understand what it takes, you may be very successful in negotiating your own debts without paying a professional. That can mean even more money in your pocket.

Debt Management is an entirely different program. Credit counseling or debt management is used to cut your monthly payments to your creditors but you still pay the full balance. It’s a good alternative if you are unable to meet your monthly obligations to your creditors and are falling behind.

A debt counselor can set up a program with your existing creditors and in essence “freeze collections” and reduce your monthly payment. This gives you adequate time to repay everyone without the worry of the accounts going into collections or being sued.

A good debt management program will be a not for profit who will work as your counselor and do all the dirty work with the creditor. You simply pay one payment to the credit counseling firm each month and they disburse your payments for you to your creditors.

You can even get many creditors to agree to freeze the interest or remove late fees. Often they will also “suspend” credit reporting while you complete the program.

Debt negotiations is NOT debt management and vise versa.

See more about debt management and the difference between it and debt consolidation.

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Credit repair is around the corner for many Americans

June 26th, 2008

I was watching MSNBC today and they were talking about just how bad the credit crunch is going to get and that millions of Americans haven’t even begun to see the credit report issues until now.

People were so busy living off credit cards to pay their daily/monthly expenses that no one seemed to be worrying about their credit. After all, they had bigger fish to fry like mortgage payments and gas. Not that kind of gas, fuel!

In the United States, an individual’s credit history is compiled and maintained by companies called credit bureaus. Credit worthiness is usually determined through a statistical analysis of the available credit data. A common form of this analysis is a 3-digit credit score provided by independent financial service companies such as the FICO credit score.

An individual’s credit score, along with his or her credit report, affects his or her ability to borrow money through financial institutions such as banks.

The factors which may influence a person’s credit rating are

  • ability to pay a loan
    interest
    amount of credit used
    spending patterns
    debt

Slow and steady we are seeing a rise in the number of consumers who are just now realizing the impact of the economy on their credit. From maxing out their credit cards to late paid mortgages, consumers are now starting to wonder what havoc it had on their personal credit reports.

When you are worried about the economy and your job, you don’t think much about your credit, until… you need it again. Now that consumers have gotten some breathing room with rate cuts and refi’s, they now see their credit reports and wonder what to do.

I’m sure millions of people who once had A+ credit now have F- credit. It was inevitable for many simply because inflation and the economy made it impossible to stay afloat.

Well, you can work on fixing your credit but be prepared to spend some time really researching the issue of credit repair.

It may  be a few late payments, over limit fees or more detrimental damage like a foreclosure or repo but… you can improve your credit over time. You have to find the courage to look at all three credit reports and then make a plan. A great resource for self help credit repair can be found here. For information on full service credit repair, go here.

 

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Defendants in Debt Collection Scheme Aimed At Hispanics Agree to Settle FTC Charges

June 11th, 2008

Two defendants have agreed to settle Federal Trade Commission charges for allegedly victimizing Spanish-speaking consumers nationwide by posing as debt collectors seeking money the consumers did not owe. They and the corporate defendants they controlled have been barred from further violations of federal law involving debt collection.

According to the FTC’s complaint, Maria Oceguera, her daughter Dulce Rickards (aka Dulce Ugalde and Dulce Ruiz), and others sold an English-language course, “Inglés con Ritmo.” They advertised the course as free except for a shipping and handling fee.

Several years after the defendants stopped selling the course, they tried to collect money, typically $900, from consumers who had purchased or inquired about the course. An overwhelming majority of the consumers who were contacted owed nothing, and yet the defendants routinely engaged in a variety of deceptive debt collection practices. At the FTC’s request, in 2007 a federal judge stopped the operation and froze the defendants’ assets.

Under the settlement, the defendants are barred from violating the FTC Act by misrepresenting that they’re collecting on a valid debt, that they’re attorneys or represent attorneys, that they will take action they cannot take legally or do not intend to take, and that nonpayment of an alleged obligation will result in arrest, imprisonment, or loss of property or wages. The settlement prohibits the defendants from misrepresenting the consequences of paying or not paying a debt, making misrepresentations in order to collect a debt, and misrepresenting or omitting any fact material to a person’s decision to buy or use a product or service.

The defendants are banned from violating the Fair Debt Collection Practices Act (FDCPA) by using falsehood or deception to collect a debt, indicating that they’re attorneys or represent attorneys, and representing that nonpayment will result in arrest, imprisonment, or loss of property or wages unless the action is lawful and they intend to pursue such action. They are also prohibited from threatening to take an action unless it’s lawful and they intend to do so, and from using a business name other than the collector’s real name.

Oceguera and Rickards are also barred from violating the FDCPA by collecting an amount not expressly authorized by the agreement creating the debt or permitted by law;harassing consumers, including causing a telephone to ring or conversing with consumers to annoy or abuse them; and failing to notify consumers of their right to dispute and obtain verification of their debts and to obtain the name of the original creditor.

In addition, the court ordered the same permanent injunctive relief against the companies controlled by Oceguera and Rickards: Tono Publishing; Promo Music; and Tono Records, dba Tono Music; and Professional Legal Services.

The settlement with Oceguera and Rickards includes a $1,186,754 judgment, all but $50,934 of which is suspended based on their inability to pay. The full judgment will be imposed if they are found to have misrepresented their financial condition. The settlement also contains standard record-keeping provisions to allow the FTC to monitor compliance with the order.

By a 4-0 vote, the Commission approved the filing of the consent decree in the U.S. District Court for the Central District of California. On May 1, the court approved the FTC’s settlement with Oceguera and Rickards. On May 27, the court entered a separate final judgment and order for permanent injunction against the corporate defendants.

NOTE: This consent decree is for settlement purposes only and does not constitute an admission by the defendants of a law violation. A consent decree requires approval by the court and has the force of law when signed by the judge.

Copies of the consent decree and order are available from the FTC’s Web site at http://www.ftc.gov and the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint in English or Spanish or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at http://www.ftc.gov/ftc/complaint.shtm. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1,600 civil and criminal law enforcement agencies in the U.S. and abroad.

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