FTC sues radio-advertised credit repair service


The Federal Trade Commission is charging that RMCN Credit Services Inc. used radio advertising, as well as other forms of marketing, to lure clients with the promise that they could repair unsavory credit ratings. It has taken the company to court in Texas, saying the claims were false and customers were bilked out of as much as $2K in advance in retainer fees.

Not only were the company’s statements to potential clients allegedly false, its technique for “repairing” credit was to simply challenge any negative entries on a client’s report, whether the entry was accurate or not. They told clients that this simple challenge put a burden of proof on the credit ratings services.

As the FTC explained it, “The complaint alleges that RMCN misrepresented to consumers that federal law allows the company to dispute accurate credit report information, and that credit bureaus must remove information from credit reports unless they can prove it is accurate. In the company’s words, credit bureaus must “prove it or remove it.” RMCN charged a retainer fee of up to $2,000 before providing any service, and falsely told consumers that Texas law allows credit repair organizations that are registered and bonded to charge an advance fee.”

The marketing of the service began in 2004, primarily via radio advertising and the use of websites, although FTC says billboards and pamphlets were also part of the mix.

The FTC is asking the court for civil penalties for each individual misrepresentation, up to $11K per on or before 2/9/09 and up to $16K per thereafter, the cessation of the company’s operations, disgorgement of its ill-gotten gains and restitution to its victims.