Beware of Credit Repair Scams

Madeleine Jones
May 9, 2017

scam on road signs, credit repairThere are many companies eager to take advantage of the misfortunes of others by promising quick and easy solutions to credit reports. The reality is that many of these “offers” are fraudulent and can expose clients to considerable legal and financial troubles.

How to Spot a Fraud

Separating scams from legitimate services requires vigilance and knowing what firms can, and can’t do. Common “red flags” include the following:

1. Asking for Money Before the Job is Completed. The Credit Repair Organizations Act prohibits companies from collecting money for credit repair services until they have delivered what was agreed upon. Many victims are scammed at this stage because they seek a quick solution to the harassing behaviors of debt collectors.

2. Offering a New Social Security Number or Employer Identification Number. No company should require an individual to apply for either of these in order to repair existing credit. In many cases, fraudulent credit repair services utilize stolen SSN#’s and EIN’s. Should an individual utilize these in an attempt to establish new credit, they can be held liable for fraud and identity theft which can result in heavy fines and incarceration.

3. They Promise the Moon. Credit repair takes time and patience. There are no “quick” solutions. Any company that promises to remove bankruptcy, legal settlements, liens, tax debts, etc. in short order is being less than truthful. If it is a legitimate liability, it will remain on an individual’s credit report for the amount of time prescribed by the Fair Credit Reporting Act.

4. They Prohibit Direct Contact with Creditors or Credit Bureaus. It is an individual’s legal right to contact their creditors and the credit bureaus. Any company that attempts to prohibit this contact through threats or ominous sounding contract clauses is almost always seeking to cut their clients access to accurate information regarding their debts and credit.

Remedies for Victims of Credit Repair Fraud

Individuals who have lost less than $10,000 can file a lawsuit against a credit repair company in Nevada small claims court. Individuals may also file complaints with the Federal Trade Commission and the Attorney General’s office.

In all cases, it is advisable for individuals who have been scammed by credit repair companies should speak with a credit attorney in Nevada prior to taking action. This can ensure that proper documentation is prepared and that the relevant facts of the case are thoroughly gathered and presented to the courts.