Jan 05 2011

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Credit fix and debt elimination scams

A new year often brings new resolutions, and Texans with mounting consumer debt online or bad credit ratings may be tempted by services that promise quick fixes to a bad credit problem.
Unfortunately, there are no easy ways to remedy low credit scores. If a credit repair or debt relief offer sounds too good to be true – it usually is.
Rebuilding a good credit rating takes time and good financial management. Legitimate credit counseling services and debt repayment plans can offer long-term, practical solutions to debt management. It is critical, though, that debtors distinguish between lawful assistance programs and fraudulent schemes that attempt to take advantage of struggling debtors.
Unfortunately, many fraudulent “debt elimination” and “credit repair” scams charge customers hefty fees for “quick fixes” that never materialize.
The Office of the Attorney General (OAG) has aggressively cracked down on these unlawful scams.
Our Consumer Protection and Public Health Division recently stopped two Austin-based operations from falsely claiming they could remove “negative” items from clients’ credit reports.
Only inaccurate or obsolete items can be legally removed from a debtor’s credit report, while items that reflect negatively on a person’s credit must remain on the report until they expire with the passage of a set amount of time. The defendants in those cases, Austin Credit Doctor and America’s Credit Doctor, charged customers several hundred dollars in advance fees for their unlawful “credit repair” services. Texans with inaccurate or obsolete information on their credit reports can work directly with credit reporting companies to remove information that should not be included. No one should pay a “credit repair” service to remove those easily remedied items for them. A related scheme, “debt elimination” scams, falsely promise to eliminate consumer debt within just a few short months. Too often, these scams charge large, up-front fees and then fail to deliver any valuable services to customers. For example, the OAG stopped a fraudulent “debt elimination” operation that falsely promised to quickly and completely eliminate customers’ debt. To become enrolled in the program, customers were required to wire a onetime $5,000 deposit to an unidentified “bank.” The scam’s operators claimed the bank would initiate a debt elimination process and use the deposit to defray the costs of that process. Once all the customers

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