Over the past few years, a handful of credit repair companies have found themselves in deep trouble for deceptive behavior. These companies have abused the trust of consumers and it has led to substantial losses and many hardships. This is far more common than consumers may believe. In fact, several big credit repair companies have been forced to shut their doors in 2017, due to deception. Within this comprehensive guide, consumers will learn more about deceptive credit repair companies and how to avoid falling into a trap.
At the end of October, a Montgomery, Alabama credit repair company was forced to permanently close due to illegal and deceptive practices. The Alabama Attorney’s General’s Office claimed that Scott’s Credit Repair was engaged in illegal behavior that ultimately harmed the consumer. The company’s owners, John and Krystal Scott, are now prohibited from engaging in any type of credit repair or consume finance service in Alabama. The company was accused of deceiving and defrauding customers on a regular basis.
Scott’s Credit Repair attracted customers with advertisements claiming that they would be able purchase expensive vehicles and homes by working with the company. Many of the testimonials and customer stories provided by the company were deemed to be bogus. The company was also engaged in a practice referred to as jamming, which helps to create the illusion of improved credit. Suffice to say, the risks for the consumer are enormous.
CFPB Cracking Down
The federal government is well aware of the fact that consumers are often taken advantage of by credit repair scams. In fact, the Consumer Financial Protection Bureau recently reached two legal settlements with separate companies. The companies offered credit repair services. The companies were accused of charging illegal advance fees and misleading customers about their services. Federal laws have been put in place to ensure that consumers are protected from such schemes. For starters, these entities are actually prohibited from requiring payments upfront. They are usually not allowed to request payment, until they’re able to show documented proof that they’ve achieved improvements.
These companies also offered bogus money back guarantees, which were worthless for the six months. The consumer was forced to pay for at least six months of services, before the money back guarantee became valid. Consumers need to be well aware of the laws and regulations that govern credit repair companies, before moving forward.
Research The Company’s Background
Suffice to say, consumers are always at risk of being ripped off and scammed. This is why it is absolutely pertinent for consumers to take steps to validate the company’s legitimacy and trustworthiness before moving forward. Better Credit Blog offers credit repair advice. Consumers should use all resources available to them to find a company that will be able to offer them a great service that proves to be well worth their money. The consumer should dig into the company’s background to ensure that they have not been involved in anything illegal or deceptive in the past.
Remember that history often repeats itself. Therefore, it is always best to stay away from companies that have engaged in illegal practices before. Do your research to avoid potential troubles.
Beware Of Upfront Payment
If you run into any credit repair companies that want you to pay before providing you with any services, you have to be extremely cautious. In fact, according to the Credit Repair Organizations Act, these companies are not legally allowed to ask for payment until they have completed the services that they promised. Never pay a company upfront before they show you a new credit report that have actually improved your credit score. Remember that there are laws that forbid these companies from requiring upfront payments!
Unable To Provide Proper Information
When speaking with credit repair companies you always want to have several questions ready to ask them beforehand. For instance, you might want to ask about how they actually repair your credit, and how long the process will take. At any time if the rep is unable to answer your questions, this is a good indication that they are scammers or don’t know what they are doing. Just asking a few questions can help you really determine if you are dealing with a reputable company or not.