Another Credit Repair Firm Bites the Dust

Every so often, I come across a website promoting some “super-secret” method for deleting negative information from credit files. The ads make wild promises: Bankruptcy! Judgments! Collection Accounts! All can be cleared from your credit permanently!

After 22 years of seeing credit repair firms come and go, I am quite confident in saying there is no credit repair fairy who can waive a magic wand and remove negative but accurate information from your credit files (nor are their "loopholes" in the law that do the same.) But I will confess I sometimes wonder what these firms are doing to get results for their clients.

Now we know at least one credit repair company's "super-secret" method for deleting negative credit: pretend your clients are victims of identity theft. That’s the approach that got Sam Tarad Sky and his company, Credit Restoration Brokers LLC, into hot water with the Federal Trade Commission. The FTC just announced a settlement against Sky, his firms (which also included a debt settlement company Debt Negotiations Associates LLC), his attorney Kurt A. Streyffeler, and Streyffeler’s law firm, Kurt A. Streyffeler, P.A. (ever notice how many companies are involved in these FTC complaints?).

According to the FTC, Sky’s firm falsely told consumers he could improve their credit reports by removing negative information such as judgments, foreclosures, tax liens, bankruptcies, repossessions, and child support delinquencies from the reports regardless of how old or accurate the information was. The FTC’s complaint also alleged that he and his lawyer falsely told consumer reporting agencies, as a reason to dispute negative items, that consumers were identity theft victims.

Customers paid up to $2,199 for these services. Apparently Sky overlooked the federal Credit Repair Organizations Act (CROA) and charged customers upfront. He also apparently neglected to tell customers they could cancel the contract within three business days.

Oops.

I can completely sympathize with the desperation of many consumers today whose credit scores have taken horrible hits and who feel like they will never get credit again. But please be very careful before you decide to pay for services that make wild promises about what they can do to fix your credit. Before you even go down that road, use Credit.com’s (truly) free Credit Report Card to understand where your credit stands, then take advantage of the myriad free resources in our Learning Center to figure out what to do about it.

The fine print: The Commission authorizes the filing of 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 defendants have actually violated the law. Stipulated court orders are for settlement purposes only and do not necessarily constitute an admission by the defendants of a law violation. Stipulated orders have the force of law when signed by the judge.

Gerri
Detweiler – Personal finance author and Credit Advisor for Credit.com, Gerri contributes budgeting, debt
recovery and savings information online. She is also the co-author of Reduce Debt, Reduce Stress:
Real Life Solutions for Solving Your Credit Crisis.

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