Hello, I am looking for some input on if credit repair companies are acting illegally (Lexington law, clear credit, etc) This companies all collect money before they begin to repair credit. I was reading the Credit repair Organizations act http://www.ftc.gov/os/statutes/croa/croa.htm and it states: SEC. 404. PROHIBITED PRACTICES.(7) (b) Payment in Advance.--No credit repair organization may charge or receive any money or other valuable consideration for the performance of any service which the credit repair organization has agreed to perform for any consumer before such service is fully performed. Does this mean that Most credit repair companies are acting illegally? Vegasx
Hi, Vegas. If you read the CROA further, you'll note that its provisions exempt law firms and attorneys. Lexington, for example, is chartered as a law firm, and its directing attorney Victor Lawrence supervises its staff of paralegals who facilitate case handling. Unless things have changed since I was a client a few years ago (and I don't think they have), you pay Lexington an administrative setup fee of $65 or so, and then you subsequently pay a retainer fee of something like $35 per month for the previous month's credit repair work. Regardless, since Lexington is a law firm, they could charge the money up front if they wanted to. I have no idea how Clear Credit does things, but maybe somebody else can speak to that. Doc
Hey, vegasx, sorry I was only able to answer a piece of the puzzle. You didn't acknowledge my effort except for "bump." I realize I couldn't say anything about Clear Credit because I don't know anything about them (other than the fact that they are the corporate progeny of what used to be called Junum). Any comment regarding my observations re CROA, law firms, etc.? Doc
Doc, Sorry I am new to the board and still getting use to it. Your observations were very helpful, thank you very much. I am researching this subject because it seems like there are so many credit repair companies that seem to be acting illegally. You did shed some light on the subject. I was hoping to get more input from the wise members of this board. Thanks Again, Vegasx
LOL, no problem -- I'm curious about how some of these non-lawyer companies do business too. Hopefully somebody will be able to discuss ClearCredit (Junum) -- whether they collect fees up front, etc. I just did a Google search for credit repair firms and up popped quite a few sites I've never seen before, some of which look like they were put together by fifth graders (not to insult fifth graders). Check these out (lol): 1) http://www.wwcrb.com -- Some of the information on their "How We Do It" page is incredible. Examples: "We use standard R2 through R9 forms in our program. We submit Hawk Reports, Bulls Eye Reports, FTC Reports and much more." and "What many people do not realize when they are not satisfied with their Beacon Score, or National Risk Score, is that their true rating is not determined by the credit bureaus. It is actually determined by the Fair Isaacs Committee(FICO) in San Rafael, California which is where the credit bureaus receive their information from daily." 2) http://www.creditrebound.com/service.html -- The following explanation of "how it works" is quoted verbatim. It makes no sense to me, but maybe I'm just mentally deficient. Perhaps it will make sense to you: "Here's how it works. Say for example you have three late payments on your credit report. By disputing these through the 3 major credit bureaus (Equifax, Experian, TransUnion) your creditors must prove that you were late within a 30 day period. If they cannot, it's gone, and if they do, that's when the CGS Financial Team releases its proven, professional dispute tactics." 3) http://www.legalnewcredit.com -- Their site is called "Legal New Credit" but I'm not sure what in the world they're advising. It doesn't sound like file segregation, but it doesn't exactly sound like it dodges fraud either, viz.: "What we teach is a method the rich have been using for decades. Anyone who is knowledgeable in how the rich manage their financial affairs is well aware of the fact that they own little or nothing under their own names, yet still retain control of their property. This is how the wealthy can routinely file bankruptcy every seven years in order to wipe out their debts without losing any property or suffering the negative credit consequences of bankruptcy." 4) http://hometown.aol.com/clearurbills/myhomepage/business.html -- This AOL member is pretty brazen about it. He wants $100 up front and then he'll do the following for you. He may not be able to spell "bankruptcy" correctly, but he guarantees he can force the CRAs to remove it (ahem): "Assertive investigation techniques force credit bureaus to remove any derogatory information including Bankrupcy. Low $100.00 fee guarantees initial investigation and follow up copy of all credit reports after item deletion." Amazing, huh? Doc
Doc, Very good examples, you have found the best of the worst. I see sites all day long that even a 5th grader would not claim. I am the DMOZ editor for http://www.dmoz.org/Home/Personal_Finance/Money_Management/ I see all types of credit repair and credit counseling sites, many of them are so obviously fraudulent and damaging for consumers it is frightening. I have never found a board of this quality to discuss credit issues on, it is truly an incredible resource. I have fixed credit for some people and have accepted financial compensation for my time. I don't charge much, usually whatever they can afford to pay me for my time. It is more of a hobby than an income opportunity for me. That is why I am concerned about this issue. I do not wish to open myself to future legal problems. Once again thank you for your input and time into this. I am under the impression that this forum is your creation or partially so, it is a privilege to get your attention. I am involved in the finance end of the automotive business in Las vegas, one of the hardest places in America to acquire auto loans and the 4th worst credit behind Kentucky, Alabama and Utah (which has the highest BK rate per capita in the nation). Hopefully I can contribute to this forum with my expertise in all areas of automotive financing and other board members can benefit from my knowledge and protect themselves from unscrupulous car dealerships (That would be all dealerships except mine I also know exactly what online financing companies like E-loan, Peoples first (cap one), Household, Road Loans (triad) and Americredit, who is not currently accepting online apps because of how bad there portfolio is riddled with 30,60 and 90 day lates, look for in new loan apps. I also am very aware of what most 2nd chance banks want in terms of who and what they will finance and what the APR will be based on credit history and FICO. I have seen probably 5,000+ credit reports in my day so I know exactly what finance companies want and what they don't want. Maybe one day one of my Auto Finance answers will be posted in the "Hall of Fame" Hopefully we can get one of the legal eagles in this forum to post on this subject and start a good thread. Vegasx
Great job with dmoz, vegasx! No, this isn't my site, but I agree with you that Creditnet is a tremendous resource, and it has helped me greatly. As a long-time member, though, it's my pleasure to welcome you regardless! I did have fun looking over some of the disreputable credit repair sites. It is incredible to read some of the drivel they're putting out there. Doc
