A home-buying consulting business that offers credit repair and home-buying consulting services has agreed to settle with the Federal Trade Commission for alleged federal law violations, including illegally charging an advance fee for credit repair and falsely claiming that they can remove negative information from consumers’ credit reports, even if the information is accurate and timely. At the Commission’s request, the U.S. Department of Justice (DOJ) filed the FTC’s complaint and proposed settlement in federal court.
According to the complaint, consumers are led to Home Buyers Consulting Network, Inc. (HBCN), which is based in Raleigh, North Carolina, through its Web sites and by a company that sells lists of foreclosed properties and suggests that its customers call HBCN if they need credit repair or access to zero or low down-payment home financing. In sales pitches for its credit repair services alone, and in conjunction with pitches for its home-buying consulting services, HBCN makes claims such as: “Our program offers the ability to REPAIR, RESTORE, or ESTABLISH your credit so that you may be able to qualify for 100 % home financing, lower interest rates and better quality credit.” HBCN also offers a “money back guarantee . . . to increase your credit score by 50 to 100 points or delete six derogatory items (from a consumer’s credit report).” HBCN also promises consumers help with finding a home to buy, through a referral to its purported network of realtors and lenders, the complaint stated.
Before performing the promised credit repair services, HBCN’s representatives typically require advance payment of at least $99 for those services, and $399 for bundled credit repair and home-buying consulting services. They also require additional advance payments for credit repair services, typically ranging from $19 per week to $49 per month, and promise to refund all but a $99 fee if consumers do not receive the promised results, provided that the consumers work with them for a period ranging from six months to a year.
HBCN, d/b/a Home Buyers Network, Good Credit Company, GoodCredit.com, and 0downhomebuyers.com, and Douglas Andersen Moore a/k/a Douglas A. Moore, HBCN’s president, CEO, and majority shareholder, are charged with violating the Credit Repair Organizations Act (CROA) and the FTC Act by falsely representing that they can obtain permanent removal of derogatory information from consumers’ credit reports, including bankruptcies, even where the information is accurate and not obsolete. They also are charged with violating CROA by requiring advance payment for their credit repair services; not including on their consumer contracts conspicuous statements about the consumer’s right to cancel the contract without penalty or obligation at any time before the third business day after the consumer signed the contract; and not providing, before the contract was signed, the written statement of consumer credit file rights under state and federal law, and the written “Notice of Cancellation,” both required by CROA.
Under the proposed settlement, the defendants are barred from further CROA violations, and from further misrepresentations affecting a consumer’s decision to buy anything from them, including credit repair services. They also are barred from selling, renting, or otherwise disclosing personal information about anyone who was a client before the order is entered, and from using or benefitting from that information.
The settlement contains a $573,000 civil penalty that will be suspended, and, for consumer restitution, a $40,000 monetary judgment that will be suspended upon payment of $10,000. The full civil penalty and judgment amounts will be imposed if the defendants are found to have misrepresented their financial condition. The settlement also contains standard record-keeping provisions to allow the FTC to monitor compliance with its order.
This case was brought with assistance from the North Carolina Department of Justice, Office of the Attorney General, and the Better Business Bureau Serving Eastern North Carolina.
The FTC advises that only time, a conscious effort, and a personal debt repayment plan can improve your credit report. The first step is to learn what information is in your credit report. If you find errors or mistakes, federal law gives you the right to have them corrected – free of charge. Federal law requires that the nationwide consumer reporting companies – Equifax, Experian, and TransUnion – provide you with a free copy of your credit report once every 12 months, if you ask for it. To order your free report, visit annualcreditreport.com, call 1-877-322-8228, or complete and mail the Annual Credit Report Request Form. Other credit repair information is available at http://www.ftc.gov.
The Commission vote to authorize staff to refer the complaint and stipulated final order to the DOJ for filing was 5–0. The complaint and proposed stipulated consent order were filed in the U.S. District Court for the Southern District of New York on May 14, 2008, and are subject to court approval.
NOTE: The Commission files 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 defendant has actually violated the law. This stipulated final order is for settlement purposes only and does not constitute an admission by the defendant of a law violation. A stipulated final order requires approval by the court and has the force of law when signed by the judge.
The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, click http://www.ftc.gov/ftc/complaint.shtm or call 1-877-382-4357. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1,600 civil and criminal law enforcement agencies in the U.S. and abroad. For free information on a variety of consumer topics, click http://www.ftc.gov/bcp/consumer.shtm.
(FTC File No. 0623231)