FTC Juggles Credit Repair, Credit Bureau Complaints

The Federal Trade Commission seems to hate the credit repair industry just as much as the three major credit bureaus do. In this article we'll explore the reasons why the credit bureaus mislead the public about credit repair. What is more difficult to explain or even begin to understand is why the FTC, an agency that protects consumers, does essentially the same thing.

The credit reporting industry has been lying about credit repair for decades. Credit repair companies provide a much needed service for consumers who are frustrated with misleading, inaccurate and unverifiable credit reports but the credit bureaus know they will have to spend money, lots of money, to clean up a deeply flawed and fractured credit reporting system.

So instead of cleaning up their act, the credit bureaus decided long ago to dishonestly attack and smear the industry, credit repair, that helps consumers force credit bureaus to correct errors on credit reports.  Honestly and truthfully verifying a consumer dispute involves a time consuming process of communication and research. The credit bureau should request the entire history of an account in question, then painstakingly review the complete payment history of the account (including the original application) to ensure that only accurate information is reported. This is mandated by federal law.

It's also common sense. However, credit bureaus DO NOT employ common sense, honesty, integrity or any real research when verifying a consumer dispute. The bureaus consistently violate federal law and the FTC consistently let's them get away with it. I wrote about this in an earlier article entitled "Credit Repair Disputes" published in Ezine Articles. Here is a pertinent section of that article:


"Today I am going to help you understand what a credit reporting agency does after you submit your credit dispute to them, and why persistence and perseverance are so important for your credit repair success. Under the Fair Credit Reporting Act a credit reporting agency is required to research your dispute with the source of the information. The credit bureau should check the entire record of the account in question and compare it with what they reported. This would allow them to make the appropriate changes and return a corrected, accurate credit report to you, the consumer, within thirty days.

However, the credit bureaus never do this. What they actually do with your credit dispute is shoddy and shocking. They shrink each dispute to a two digit code called a consumer dispute verification. Often this CDV is sent to independent contractors located in third world countries all over the globe. Just picture such a verification process. Whether you get approved for a car loan, home financing, credit card, apartment, job or insurance now rests in the hands of an overworked, poorly paid, quota driven third world Joe using a two digit code 5,000 miles away from the original creditor. It's absurd, outrageous and not proof of verification by any reasonable definition."

Although no less upsetting, it is understandable why the credit reporting industry hates the credit repair industry. Credit repair specialists force credit bureaus to do their jobs, a job, when performed correctly, that costs credit bureaus much time and money.  Equifax, Experian and Trans Union don't want to spend this money. Therefore they consider it much more cost effective to run a public relations smear campaign against honest, ethical men and women who's only "fault" is trying to help consumers deal with obdurate, uncaring and incompetent credit bureaus.

This unfair attack against credit repair services is not limited to a well financed PR smear campaign. Starting over twenty years ago, the credit reporting industry, their associates and confederates, worked diligently to have Congress pass draconian legislation that would cripple the credit repair industry.

I was there from the beginning. There were over 100 small credit repair business men and women who called, mailed, faxed and visited Senators and members of Congress (entirely at our own expense) after we had read some of the proposed legislation regulating our beloved credit repair industry. We faced a major challenge. Our enemy was the credit reporting industry along with the banking and insurance sectors. They had billions of dollars and a pack of lies. We had one lobbyist, a minimal budget and the truth.

For a few years we were able to stop the laws from passing. I was honored to be selected by our group to testify in Congress. The Congressional Hearing was covered by C-Span and all the major media outlets. It was a big deal. A couple of days later I asked to speak privately with then Committee Chairman Joseph P. Kennedy (my Congressman from Massachusetts). He invited me up to his office on Capitol Hill.

I showed up with two others from our industry, had a photo op and sat down to plead our case. Congressman Kennedy was gracious. He gave me plenty of time to speak. After listening to me he said I made a compelling argument but the FTC testified that credit repair was a scam; "...are they lying?" he asked.

I'd like to report I had a "Mr. Smith Goes To Washington" Hollywood type ending, but the truth is we suffered a crushing defeat. The bill passed and was signed into law by President Clinton. I was left with a civics lesson never taught in any schoolbook. Those with the money make the laws. The small business man and woman are ignored by their elected officials whose only concern is raising enough money to run successful reelection campaigns.

This brings me to the Federal Trade Commission. Congressman Kennedy rightly gave a great deal of weight to what they said about the credit repair industry. I couldn't call them liars when prompted by Kennedy. I did tell him that the FTC seems to have a vested interest in helping the credit bureaus and therefore did not tell the complete story about credit repair or credit reporting. Joe Kennedy voted against us.

It's because I have great respect for the FTC that their position on credit repair has confused and conflicted me for years. Back when I was lobbying and testifying in Congress I met and spoke with several people from the Federal Trade Commission. These were intelligent, honest, caring folks.

The top FTC Commissioners are appointed by the President with advice and consent of the Senate. Other appointments can be made by the President, department heads or the courts. Then there are thousands of civil service positions that keep the FTC running efficiently. These are some of the brightest minds in the country. They do great work. They care about protecting American consumers.

Why do they hate credit repair so much? Why do they cheer the credit reporting industry? An industry that has gone unchecked by the FTC as it runs roughshod over consumers year after year on such a colossal scale that it's mind boggling.

It is baffling but make no mistake about it, they don't like credit repair companies. The FTC has never filed a significant action against a credit reporting agency. The few times they did cite a credit bureau for abuses, the bureau was punished with a slap on the wrist. Yet when they go after a credit repair service, the FTC uses everything in its considerable power to crush the company. No credit repair company can afford to defend a federal lawsuit so they settle by signing a consent decree. Lives are ruined, reputations tarnished and jobs lost. For what? Trying to help consumers deal with an unfair, unjust and incompetent credit reporting system.

At the hearing I listened as the FTC spokesperson claimed that he has never heard of a legitimate credit repair company! A line they still repeat like a mantra to this day. I remember speaking with a FTC employee who told me she felt it was illegal for a person to sell a book on how to repair one's credit reports! She was unfazed when I reminded her of the First Amendment.

One only has to look at the FTC's annual report of consumer complaints to see they have a huge bias against the credit repair industry and an almost love affair relationship with credit bureaus. First, let's look at what the FTC publishes, then I'll show you how the statistics and facts were skewed to misrepresent the truth.

FTC Issues Report of 2009 Top Consumer Complaints

Rank Category No. of Complaints Percentages
1
Identity Theft 278,078 21%
2
Third Party and Creditor Debt Collection 119,549 9%
3
Internet Services 83,067 6%
4
Shop-at-Home and Catalog Sales 74,581 6%
5
Foreign Money Offers and Counterfeit Check Scams 61,736 5%
6
Internet Auction 57,821 4%
7
Credit Cards 45,203 3%
8
Prizes, Sweepstakes and Lotteries 41,763 3%
9
Advance-Fee Loans and Credit Protection/Repair 41,448 3%
10
Banks and Lenders 32,443 2%
11
Credit Bureaus, Information Furnishers and Report Users 31,629 2%
12
Television and Electronic Media 26,568 2%
13
Health Care 25,414 2%
14
Business Opportunities, Employment Agencies and Work-at-Home Plans 22,896 2%
15
Computer Equipment and Software 22,621 2%

OK, if you look at number 9 on the list you'll see the complaints about credit repair. If you believe this list at first glance then according to the FTC, there are more complaints about credit repair companies each year in the US than there are about credit bureaus (listed as number 11)!

Of course this is absurd. The actual number of consumer complaints about credit repair companies is insignificant. It's a tiny fraction of 1%! It doesn't even belong on this important list. So why is it listed by the FTC? How did credit repair make it to number 9, two positions ahead of credit bureaus?

The truth is the FTC juggled the facts and lumped credit repair in with Advance-Fee Loans and Credit Protection services like Life Lock, two industries that have absolutely nothing to do with credit repair! They did this to game the results. It makes it look like credit repair receives enough complaints annually to be ranked number 9 but the fact is if the FTC didn't lump credit repair in with two unrelated industries, credit repair complaints wouldn't make the top 1000 in an honest list.

But it gets better. The number one source of consumer complaints year in and year out has been the credit reporting industry, three companies, Equifax, Experian and Trans Union. No other industry even comes close. Why then does the FTC list credit bureaus way down at number 11?

For some reason they don't want to reveal the true picture to the American public. Look at number 1 on the above consumer complaints list. It's labeled "Identity Theft". That my friends is a euphemism for "Credit Bureaus"! Therefore, one must add the number of complaints from item 1 with item 11 to get the truth about the number of consumer complaints about credit bureaus each year in the US. That's over 300,000 complaints! Credit repair companies don't belong on this list at all. That's what the facts truthfully reveal. It's a clear example of FTC support of credit bureaus and bias against credit repair companies.

Chicago's Norma Reyes Misleads Public With Credit Repair Dog and Pony Show

In another colossal waste of taxpayers' money, the city of Chicago has charged nine credit repair companies with fraud while turning a blind eye on true culprits Trans Union, Equifax and Experian. Shockingly, Norma Reyes, Chicago's Commissioner of Consumer Services has teamed up with one of the nation's most corrupt and dishonest organizations, the Better Business Bureau, to pull the wool over Chicagoans' eyes about credit repair.

Norma Reyes's co-star in the credit repair show, the Better Business Bureau runs one of the country's largest con games. They don't police businesses and they certainly don't look out for consumers. They extort money from businesses by branding those who refuse to pay with low ratings.

Local BBBs are independently governed by their own board of directors but are "monitored" nationally by the Council of Better Business Bureaus. These charlatans receive the bulk of their income by charging annual tribute from the very businesses they report on! Depending on the size of the business, "accreditation" costs from several hundred to several thousand dollars a year. Only an accredited company (one that pays an annual fee) can receive the highest BBB rating, A+. It's a huge conflict of interest. They unduly protect businesses who pay them and unfairly rate businesses who refuse to pay up. It's crooked to the core. This is who Norma Reyes chose to associate with in presenting her dog and pony credit repair show to the press.

This witch hunt is just the latest chapter in a highly financed public relations smear campaign funded and rooted in the credit reporting industry's decades long effort to direct attention away from their failed data gathering systems and on to a straw man, the credit repair industry. Norma Reyes has hurt consumers by continuing this consumer credit charade.

How did the credit repair industry become the most regulated service industry in the United States? Was it because all credit repair organizations are "vultures" (as Reyes calls them) and "scam artists"? Of course not. The majority of credit repair services are honest and ethical. They provide much needed assistance to consumers victimized by obdurate, uncaring, unfair credit reporting companies like Chicago based Trans Union Corporation. Credit repair companies force credit bureaus to report accurately and the bureaus hate them for it. It costs money for the credit bureaus to accurately report consumer credit history. They would much rather deal with a public uneducated in the ways of credit bureau stalling tactics, high consumer credit payment history error rates and a two digit CDV dispute verification process that borders on the ridiculous.

More than twenty years ago the credit bureaus devised a plan to discredit and destroy the much needed credit repair industry. Through their lobbyists and associates they wrote draconian legislation that, if passed by Congress, would make it virtually impossible for credit repair companies to survive. Although hundreds of small credit repair business owners wrote and met with Senators and members of Congress to warn them what was really happening, they could not compete with the deep pockets of the credit bureaus, banks and insurance companies. In the end, the credit repair companies and American consumers lost.

Now a small business owner involved in credit repair has to jump through a number of regulatory hoops just to stay in business. Plus, he can't get paid until after all the services have been completed! Due to credit bureau stalling and delaying tactics it can take four to six months or longer to complete a credit repair case. What business can survive that long without cash flow? Does anyone actually believe these harsh rules were dropped on the credit repair industry for the sole purpose of protecting consumers? Of course they weren't. They were passed to destroy the credit repair industry because the powerful credit reporting industry wanted them out of the picture. It's that plain and simple. That's the way government works in America. Those with the money make the rules; those who try to earn a living helping victims of credit bureau abuses get the shaft.

However, the American entrepreneur is resilient. Many credit repair experts found they could abide by the restrictive rules and still make a living helping victims of an unjust, unfair credit reporting system. If they defined the services they provided then they could offer the public a fair contract that would pass muster and allow these companies to receive revenue on a monthly basis. Once again consumers had an effective option to fight the credit bureaus.

This brings us to Chicago and Norma Reyes's credit repair witch hunt. These credit repair press conferences pop up every few years, usually on a state level or national stage. Their purpose is not to protect the public; it's to protect the credit bureaus by discrediting the credit repair industry. As I mentioned earlier, this negative PR campaign has been going on for over two decades. If these Government agencies were truly concerned about helping American consumers wouldn't you think they would go after the major credit reporting agencies like Trans Union, Equifax and Experian? Credit bureaus receive more complaints than all other major corporations combined, yet any action taken against them by state or federal authorities amounts to a slap on the wrist. Do you think Norma Reyes would have the courage, fortitude, honesty or political guts to go after Trans Union Corporation for the pain and misery they have foisted on many of the good people of Chicago? Of course she wouldn't. She's just another lawyer, another Chicago politician.

There are bad apples in all industries. Credit repair is no exception. However there were already plenty of laws in place to address these issues. In passing strict credit repair statutes, states and the federal government were now using a sledge hammer to swat a fly. As I mentioned earlier, these laws were not passed to protect consumers; they were enacted to hamper and destroy legitimate credit repair businesses so major credit bureaus would not have to spend money verifying the accuracy of credit reports.

What Norma Reyes could have done with the "Chicago 9" is so simple. If she discovered some questionable tactics, an instructive warning would have put any honest credit repair business owner right back on track. The owner would have thanked the Commissioner after putting in policies to correct his mistakes. The amount and interpretation of credit repair regulations can be very confusing and honest mistakes can be made. This doesn't make the business owner a "vulture".

If one or more of the companies in question ignored her warnings or was suspected of a more egregious violation, then Commissioner Reyes would serve the public well by charging them. I have no problem with that. However, look at what she did. She called a press conference to indict an entire industry! She stood next to a BBB flim flam man and used a broad brush to paint all the small businessmen as vultures. That is disgraceful.

Seeking help from Trans Union, Equifax or Experian to correct and improve your credit report is like going to Charles Ponzi or Bernie Madoff for investment advice. It's insane, yet it's precisely what Norma Reyes and other consumer watchdogs advise you to do. Credit bureaus make their huge profits by controlling the reporting of negative credit information. The last thing they want is a fair system that gives folks control over their own personal information. Credit bureaus don't view you as their customer. You're just a nuisance to them. They view banks, finance companies, insurance providers, large creditors, property owners and employers as their customers. A credit bureau will never provide thorough, complete credit repair advice. It would be against their best interest to do so. You will only achieve remarkable credit repair results by using the services of a competent credit repair expert or by learning all the powerful techniques on your own. Simply calling a credit bureau's consumer assistance line and expecting your credit reports to be corrected is naive at best.

I've always found it ridiculous when some consumer advocate knucklehead slams credit repair for being a service one can do for himself. Will he also disparage an oil change service like Jiffy Lube, a restaurant like Mortons or MacDonalds, a tax preparer like H & R Block, a cleaning lady, a real estate broker? All services that offer something you can do for yourself. Plus, a knowledgeable, effective credit repair expert is often the only way to obtain a credit report that accurately reflects your true credit worthiness.

The great 19th century actress, Sarah Bernhardt once said about Chicago, " I adore Chicago. It is the pulse of America." After Norma Reyes's specious performance, Sarah is surely turning in her grave.

.

How Quickly Does Paying Down A Credit Card Affect Your Credit Score?

How quickly must you pay a credit card to affect your credit score? 

Often it doesn't take very long to reduce the balance in order to have a positive impact on your score. However, before a credit card can have a positive effect on your scores two things must happen:
1) the credit card issuer must report the depreciation to credit bureaus. 2) credit bureaus must update your credit record with the depreciation. 


The absence of a credit score 


Not all credit records are eligible for a credit score. There are minimum score requirements to ensure that results are delivered as specifically as possible. There are several reasons why credit scores may not appear on a credit report, including:

   
* The consumer has no activity on the accounts over the last six months
    
* The consumer has insufficient credit history to calculate the credit score again or not enough credit established. Generally, two years of credit history is required to obtain a score
    
* The file parameters are too large, the file contains 100 lines or more of trade lines and combined search data
    
* Incomplete data has been entered to access a report (eg, code generation and middle initial term required by the credit bureau to provide an archive and punctuation)
    
* The consumer has been reported to the credit agencies as deceased
    
* Consumers have reported being defrauded
    
* The consumer has a new credit file without combining with one of the three reporting agencies
    
* Incomplete history of residence was registered to access a credit report (2 years minimum)

What Does One TRILLION Dollars Look Like?

With President Obama, Nancy Pelosi, Harry Reid and their cohorts doing everything in their power to sink our economy into a black hole of crushing debt, take a look at this page to see what a trillion dollars really looks like:

What One Trillion Dollars Looks Like

It's mind boggling!

Props to PageTutor.com for using Google SketchUp to create this 3D image of One Trillion Dollars.

Why Do It Yourself Credit Repair Is So Frustrating

29ECRSXYWG7M In this post I will share a book excerpt that reveals the shocking truth behind the credit bureaus' shoddy data gathering practices that continue to heap so much pain and suffering on consumers trying to correct their credit reports.

You will begin to understand why the three major credit bureaus, Experian, Equifax and Trans Union have little incentive to accurately report consumer credit information and you will appreciate my advice to seek out an experienced credit repair expert when dealing with obdurate credit reporting agencies who won't take the necessary steps to correct erroneous, misleading credit reports.

As some so called watchdog groups like The Better Business Bureau continue to mislead, lie to and misinform the public about effective credit repair, you will learn the truth from this ground breaking book, "Zero Day Threat" by Byron Acohido and Jon Swartz.

How credit bureaus created and perpetuate errors in your credit history

Book Excerpt

Zero Day Threat: The Shocking Truth of How Banks and Credit Bureaus Help Cyber Crooks Steal Your Money and Identity

Rife with Inaccuracies (Pages 88-94)

Lending is the art of hedging your bets. The basic model for doing it profitably is simple. Whenever possible, make loans only to borrowers of good repute likely to repay you as agreed, with reasonable interest. Should you choose to lend to folks who might be late with a payment-or worse, default on the loan-simply charge a higher interest rate to reflect your increased risk.

The art comes in differentiating reliable borrowers from risky ones; in short, profiling. When it comes to profiling prospective borrowers, lenders have a key accomplice: the big three credit bureaus, Equifax, Experian, and TransUnion. The big three comprise a singularly powerful and essential component of our built-for-speed credit-issuing and payments system. Together these giant data-handling companies keep close track of every loan, every installment payment, every credit application for every consumer. Each bureau maintains more than 210 million files and updates more than 4 billion pieces of data each month.

This intelligence is distilled down to individual credit reports, which form the basis for calculating interest rates and dictating repayment terms for all forms of consumer credit: bank loans, credit card accounts, auto loans, mortgages, stock portfolio margin loans-you name it. What’s more, insurance companies use credit reports to determine one’s policy premiums, landlords use them to decide whether to rent to someone, and employers sometimes use them to determine whether to hire a potential employee.

To consumers, credit reports loom as a cornerstone of financial life. Over a lifetime, your credit report will determine how much you’ll pay in interest rates and insurance premiums and could factor into where you are able to live and whether you qualify for certain jobs.

To lenders-banks, credit card companies, mortgage brokers, and others-credit reports are the magic profiling tool that enable them to hedge their bets and push out fresh credit very rapidly on a mass-market scale.

To the big three, credit reports are like flakes of gold. Each credit report issued brings in revenue ranging from 50 cents (as when delivered in bulk to large banks) to $15 (as when a report is sold to an individual consumer.) Experian reported revenues of $3.1 billion in the year 2006, Equifax reported $1.6 billion, and Hoover’s Company Reports estimated private TransUnion’s revenues at $1.2 billion.

The trouble is that credit reports are typically rife with inaccuracies. It turns out that the computer-to-computer exchange among the credit bureaus, keepers of payment behavior data, and lenders, who assign rates and terms based on that information, is quick to incorporate errors and yet highly resistant to correction.

“The goal is to try to deliver as many credit reports to lenders as possible and this requires a largely automated file identification and delivery system,” says John Ulzheimer, president of Credit.com Educational Services, which advises consumers on credit management. Ulzheimer is also a former Equifax and Fair Isaac customer service manager.

Once the credit bureaus’ automated systems add erroneous data to an individual’s credit history, it can be next to impossible to clear the inaccuracies. A 2005 survey by the U.S. Public Interest Research Group (PIRG) found that a whopping 79 percent of credit reports contained errors, and 25 percent contained mistakes serious enough to prevent the individual from obtaining credit.

The PIRG survey stands out among myriad surveys and anecdotes confirming how routinely strangers’ names, wrong addresses, payment history falsehoods, erroneous judgments, and even aberrant Social Security numbers get molded into credit reports.

Yet any consumer who attempts to get errors corrected is in for an Alice in Wonderland experience. Perseverance is a must, and a satisfactory resolution often requires assistance from the cottage industry of credit repair consultants and lawyers expert at bringing Fair Credit Reporting Act (FCRA) lawsuits against the big three. “Basically you’ve got to get a lawyer and hit them between the eyes with a two by four to get their attention,” says Richard Feferman, an Albuquerque, New Mexico-based attorney, who represents plaintiffs in FCRA lawsuits.

The bureaus typically respond to complaints by reducing each one to a two-digit code forwarded in a document called a CDV, or consumer dispute verification, to the lender. Often the CDV gets routed through a series of intermediaries working in sweatshops in third world countries. One such employee testified that the bureau she worked for received up to 8,000 CDVs per day and that each worker was required to handle one dispute every four minutes to meet quotas, says Anthony Rodriguez, staff attorney for the National Consumer Law Center.

In a 2006 FCRA lawsuit filed in New Mexico by Feferman, U.S. District Court Judge M. Christina Armijo ruled that “a rational factfinder could conclude that Equifax knew that the pointless repetition of the cursory CDV procedure by its various agents and contractors was not going to resolve Plaintiff’s dispute in a timely manner and only served to delay the matter until Plaintiff tired of the process or proceeded to litigation.”

Lenders typically respond to a CDV by referencing the document containing the error in question, and going no further, says Blair Drazic, a St. Louis-based FCRA attorney “When you apply for a loan, there’s supposed to be a paper with your name on it. They never have that. They’ll say you’re in our files as owing it [the disputed loan balance], and the investigation consists of checking the same computer that reported you to start with,” says Drazic.

Testifying before Congress in 2003, Rodriguez, the National Consumer Law Center attorney, delineated the economic incentive to perpetuate errors: “So long as the mistakes about consumers generally make the consumers appear to be a worse credit risk than they really are, rather than better, the credit industry has no incentive to improve the system, especially where the current system covers additional risk by charging more for riskier borrowers wrongfully identified as being a greater risk by the credit reporting system.”

Stuart Pratt, president and CEO of the Consumer Data Industry Association, the powerful lobbying group that represents the credit bureaus, says CDVs make the process more convenient for consumers because they can report problems at any time of the day or night. Pratt notes that under federal law, consumers who are unable to resolve errors can ask the credit bureau to include a statement about the dispute in their file. But such dispute letters are widely disregarded by lenders.

“This is all designed to save them [credit bureaus] money,” says Feferman. “They just don’t have the will to fix errors. They get the same amount for a credit report whether the credit report is accurate or not, and the costs of investigations are a drag on profits.”

Pratt insists mistakes are rare. He contends the greater good is compelling. After all, an automated, wide-ranging credit-approval system perfectly complements a card-based payments system that can process transactions in as little as 1.4 seconds. And this acceleration has been crucial to expanding consumers’ buying power. Meanwhile, revolving and nonrevolving household debt climbed 580 percent to $2.4 trillion by 2007, up from $352 billion in 1980, while the median household income of young families rose just .08 percent to $45,485 over roughly the same period, according to the Federal Reserve and U.S. Census Bureau.

That ability to extend credit to virtually everyone from teenagers to first-time business owners to any consumer desiring a new SUV or high-definition television, Pratt argues, far outweighs what he characterizes as comparatively minor glitches in the system. “Credit has been democratized,” says Pratt. “Credit has facilitated economic growth in this country and it has saved consumer money on an individual basis.” Pratt makes such statements with a practiced earnestness honed during years of defending the status quo in the halls of Congress.

But what Pratt won’t ever volunteer in public discourse is that no law or decree ever gave the credit bureaus exclusive rights to handle credit records. The bureaus simply grabbed that power. And the imperfect data-handling systems the bureaus have put in place makes no profit offering transparency to individual consumers. The credit bureaus’ data-handling systems have proved to be supremely efficient and productive at a singular task: keeping our credit-issuing and card-based payments system running full tilt.

Low-tech Spree
Among those who most appreciate our credit-issuing and payments system, as is, are the identity thieves who fully grasp its weaknesses. One such rogue put Matthew and Lisa Kirkpatrick, of Portland, Oregon, through five years of hell. In February 2001, the Kirkpatricks were getting desperate because they couldn’t get a loan to finish a remodeling project to make room for their third child, who was on the way. The loan should have been a slam dunk. After all, Matthew earned a good living as a union carpenter, and the couple had always maintained a credit score of around 750, good enough to get favorable loan rates and terms.

But a couple of years earlier, a scam artist in Coeur d’Alene, Idaho, had started probing soft membranes in the credit-issuing system. Somehow the crook had gotten hold of-and renewed-Kirkpatrick’s Washington state driver’s license, though Matthew hadn’t lived in Washington for a dozen years. He also somehow obtained Kirkpatrick’s Social Security number. With those two items, the crook had all he needed to go on a low-tech crime spree.

On the Friday before the 2000 Super Bowl, the imposter opened a Wells Fargo banking account in Spokane, Washington, depositing a bad check for $5,000. Two days later, on Super Bowl Sunday, he went on a shopping spree writing checks for up to $2,000 at various Spokane retailers. When the store clerks called to verify sufficient funds to cover the check, the automated systems showed a $5,000 balance. After the checks bounced the following week, a dozen merchants were looking for Matthew Kirkpatrick to make good.

The thief wasn’t done. Over the next several months, he used Kirkpatrick’s data to open a series of cell phone accounts and obtained credit cards, which he used to stay in hotels and go on shopping sprees. He also made several trips to hospital outpatient clinics across Washington seeking treatment-and medication-for ear aches, back aches, and joint pain. None of the bills ever got paid, and each one eventually got turned over to collections. A lot of creditors were looking for Matthew Kirkpatrick.

Kirkpatrick first got wind in early 2000 that a small army of collections agents was hunting for him. He knew there had been some kind of horrible mistake, but believed the mix-up was easily correctable. In a positive frame of mind, he immediately set out to definitively prove that he was the victim of fraud.

He compiled a package of documents with police reports, letters from lenders stating he was not at fault, a copy of his signed Social Security card, a copy of his Oregon driver’s license, and a detailed cover letter summarizing the circumstances. He mailed it to Equifax in February 2001. He resent another copy of the package in March, in April, and twice more after that, the last time by registered mail, return receipt both requested and received. Each time, Equifax representatives refused to confirm receipt of the documents, much less advise Kirkpatrick of the status of his corrupted files.

“We were living in this construction zone with a new baby and growing family for two and half years,” recalls Kirkpatrick. “It was very stressful calling Equifax and saying, ‘What happened to all the police reports and all the documents I sent you?’ and them saying, ‘We shredded them. We didn’t get them. We get a thousand of these every day.’

“It was stressful knowing they had this power over me and my family. And their business decision was that it was cheaper for them to deal with you in litigation, if you end up being stubborn enough to take it that far.”
The Kirkpatricks did get their day in court in January 2005. They were awarded $210,000. As he has done numerous times, Mike Baxter, the Kirkpatricks’ attorney, directed the jury’s attention to provision 1681 I(a)(2)(B) of the Fair Credit Reporting Act, which requires credit bureaus to promptly forward documentation of a dispute to the lender. That federal rule was one of the hard-won proconsumer protections hashed out in congressional subcommittee meetings between industry lobbyists and privacy advocates. It was intended to spur a process by which the creditor is compelled to evaluate the validity of dispute in a timely manner.

However, Baxter and other FCRA attorneys say the credit bureaus and lenders have long since established a practice of dispatching dispute documents into limbo. “I have never seen a credit bureau send supporting documents to the creditor; in fifteen years, I can’t recall a single instance,” says Baxter. “They never send those documents because it’s more profitable for them to not follow the law, than it is to actually follow the law, as far as I’m concerned.”

Sweeping Immunity (pages 98-102)

Credit bureaus began humbly enough more than 100 years ago. Brothers Cator and Guy Woolford launched Retail Credit Company in Atlanta in 1899 by publishing the Merchant’s Guide for a $25 annual subscription. The Woolfords gained intelligence on prospective borrowers by sending out inquisitive Welcome Wagon women with baskets of goodies-and keen powers of observation. Retail Credit endured, grew, and evolved into Equifax.

Homegrown credit bureaus proliferated steadily through the first half of the twentieth century; their number spiked in the 1950s with Frank McNamara’s introduction of the Diners Club card and Bank of America’s launch of the BankAmericard. By 1970 the number of credit bureaus in the United States peaked at more than 2,200.

As the financial industry began to apply digital technology to speed up and extend card-based payments, consolidation of the credit bureau industry became inevitable. The process of compiling credit reports needed to be centralized and accelerated to keep pace with the rising distribution of credit cards. By the end of the 1980s, five giant credit bureaus dominated the space, and by 1997 the big three controlled 90 percent of the market.

Experian emerged from the maneuvering of conglomerates TRW and Chilton Corporation and was acquired by Grand Universal Stores of the United Kingdom. Meanwhile, the credit bureau division of TransUnion, a onetime rail car- and equipment-leasing giant, landed in the portfolio of the Marmon Group, a private conglomerate that includes the Hyatt Hotel chain and is run by the Pritzkers of Chicago, one of America’s wealthiest families.

As this consolidation played out, leaders of the credit bureau industry were mindful to defuse rising concerns about inaccuracies and misleading data increasingly turning up in credit reports. In the late 1960s, Senator William Proxmire (D-WI) stepped forward as a vocal advocate for consumer privacy protection. However, in championing the Fair Credit Reporting Act of 1970, Proxmire got outmaneuvered by proindustry senators.

What began as a proconsumer proposal got twisted into a law so probusiness that one observer, Professor Arthur Miller, of the University of Michigan, described the final version as “an act to protect and immunize the credit bureaus rather than an act to protect the individual who has been abused by the credit information flow created by the bureaus.”

The FCRA of 1970 required credit bureaus to investigate complaints within a “reasonable” period of time but set no limits. It remained silent on whether lenders had a duty to supply accurate information to the bureaus. And the coup de grace for industry: it granted credit bureaus and lenders sweeping immunity from state defamation laws by which consumers could seek legal redress for bad data getting integrated into their credit histories. This represented a 180-degree divergence from Proxmire’s original intent to create federal liability while preserving state liability, says Evan Hendricks, editor and publisher of the newsletter Privacy Times and author of Credit Scores & Credit Reports: How the System Really Works, and What You Can Do.

For the next two decades, complaints about inaccuracies and the recalcitrance of bureaus and lenders to fix errors predictably mounted. Crooks figured out how to manipulate the system, and identity theft became a rising concern. By the late 1980s, consumer groups and privacy advocates began to clamor for reform. In the early 1990s attorneys general from some nineteen states won a court injunction mandating that credit bureaus improve accuracy and do a better job of investigating complaints.

Meanwhile, in the nation’s capitol, Congress, after several years of debate, finally strengthened the federal rules. Amendments to the FCRA that took effect in 1997 required credit bureaus and lenders to investigate consumer complaints within thirty days and make full credit reports available to consumers. Yet the savvy credit bureau lobbyists didn’t come away empty-handed. They scored a valued prize: preemption of state requirements calling for the meticulous handling of credit data and responsiveness to consumers’ complaints. The preemption was set to expire in 2004.

“Industry lobbyists claimed it would be too expensive to deal with fifty different state laws, but actually, most states pass very similar laws and the easiest and cheapest way to comply is to comply nationwide with the strongest one,” says Ed Mierzwinski, consumer program director of the U.S. Public Interest Research Group.

With the states’ preemption about to expire in 2003, the horse trading between lawmakers siding with privacy advocates and those lending a friendly ear to industry began anew. When the dust settled, the credit bureaus took home the trophy they most coveted: extension of the preemption that cut off states from setting data-handling rules. Consumers’ consolation prize: one free credit report per year from each of the big three bureaus.

The bureaus would soon figure out how to turn this seemingly trivial concession into a fresh source of profits. But what they did not see coming was the impact of provisions that allowed states to enact rules to mitigate identity theft. The battle lines in 2006 and 2007 would be drawn over data-breach notification laws, requiring companies to notify consumers if sensitive data is lost or stolen, and credit freeze laws that empower consumers to ban the bureaus from compiling and issuing a credit report without the consumer’s consent.

“The real reason industry doesn’t want states to protect consumers is because the states are quicker and more responsive than the Congress in passing tough laws, and more immune to their lobbying and donation excesses,” says Mierzwinski. “By the time Congress took its first identity theft baby steps in 2003, California had already invented the security [credit] freeze and seven other states had given consumers the right to a free credit report.”

As this wrangling over regulation unfolded, the credit bureaus continued issuing credit reports using essentially the same processes honed in the 1970s. The bureaus jealously guard details about how this process works. TransUnion spokesman Steve Katz cites the danger of divulging “an unintentional instruction manual” for crooks.

But criminals long ago triangulated how the bureaus verify the identities of loan applicants and decide which records to pull into a credit report. And they’ve devised countless scams that take advantage of the system’s propensity to readily accept and amalgamate close-enough data.

A prospective borrower filling out an online loan application can submit less than nine correct digits of Social Security number and just three matching letters of the first name of someone of good credit standing. Often that’s often enough to trigger the delivery of a credit report and subsequent approval for a new cell phone account or credit card, says David Szwak, a Shreveport, Louisiana-based FCRA attorney.

“The three letters of the first name don’t even have to be in the same order or sequence. Marsha and Mark would be the same person; David and Diana would be the same, as far as the credit bureaus are concerned,” says Szwak. Last-name matches aren’t necessary, he says.

One of Szwak’s clients, Cynthia Comeaux, a native of Laplace, Louisiana, now living in Dallas, had her credit history deeply entangled with that of Cindy Carr, a military wife, living in New Orleans. “Their Socials were within 7 of 9 digits, and both of them had a C and I and N in their first names, though not in the same order,” says Szwak. “They were repeatedly blended together for years; Experian never could get it unwound, had no desire to unwind it; the other two bureaus eventually fixed it.”

The bureaus also ignore the applicant’s date of birth and employment history; this makes it easy for thieves to create fraudulent new accounts by submitting a slightly tweaked name and Social Security number-or even using a dead person’s or juvenile’s personal data. Since the bureaus also accept any address submitted by a loan applicant, a crook can easily divert delivery of credit cards and billing statements into his or her own hands, says Szwak.

Perhaps most galling to consultants and attorneys who help consumers correct errors in their credit records is the fact that when a consumer requests a copy of his or her own credit report, the bureaus suddenly become sticklers for accuracy. The bureaus supply consumers with a report that includes only those loan and payment records with a perfect match of name, address, Social Security number, and date of birth, disregarding potentially fraudulent records with any of these items awry.

“When you order your own credit report, it may not contain derogatory information from someone with a similar name or Social Security number, but that data would appear on the credit report the bank or mortgage company orders, which is a huge problem,” says Mike Baxter, a Portland, Oregon-based FCRA attorney.
Consumers who go to court to get the bureaus to correct errors occasionally get big awards. Baxter was cocounsel for Judy Thomas, of Klamath Falls, Oregon, who spent six years trying to get TransUnion to correct her credit history. In 2003, a Portland, Oregon, jury ordered TransUnion to pay Thomas $5.3 million, but a federal judge later reduced the award to $1 million.

Most successful lawsuits bring only modest awards, and the vast majority of cases settle out of court for less than $25,000. Thanks to the skills of manipulative lobbyists, kid-glove treatment from regulators, and the absence of a unified constituency of aggrieved consumers, the credit bureaus remain insulated and haven’t had to change their practices much over the past three decades, says Hendricks, of Privacy Times. Nobody ever died from an error-riddled credit report. In fact, damages to consumers, such as losing sleep over credit history errors or having to pay higher interest rates, are difficult to quantify, much less prove in court.

“They’ve never been hit with tobacco-sized litigations, and the Federal Trade Commission has been very soft on the credit reporting agencies, especially in recent years,” says Hendricks. “They’ve been able to contain it all, and just write it all off as a cost of doing business as usual.”

Credit Repair Business Owner Shot, Killed

(Latest updates follow the story)

After a shocking Holiday tragedy, the search continues for a gunman who shot and killed a man outside a holiday party in Stevenson Ranch, California.

The shooting occurred at 6:30 p.m. on Tuesday night at 26650 The Old Road, said Deputy Lillian Peck. (Latest Stevenson Ranch murder updates below)

Nabil Tawab, a 37 year old man reportedly went to the parking lot around 6:30 p.m. after attending a Christmas party at the credit repair business he owned and was shot right next to his BMW.  People inside the Christmas party heard the gunshot and ran outside.

The victim was pronounced dead at a nearby hospital.  No description of the suspect was released and no word yet from Los Angeles Sheriff Department as to motive.

A witness said the man worked at a credit repair business and was a married father of three children. Read the entire report including video here.

ANYONE WITH INFORMATION IS ASKED TO CONTACT SHERIFF'S HOMICIDE BUREAU AT
(323) 890-5500.

More information: Update Press Release - LA Sheriff's Headquarters Bureau - www.lasd.org 

Latest Stevenson Ranch, Nabil Tawab Murder Update: 

The West Ranch Beacon quotes anonymous sources close to the investigation who said Mr. Tawab was shot three times in the chest “apparently in a close grouping suggesting that the assailant may have carried out a planned ‘hit’ on Tawab.” The source also says the killer is probably long gone and maybe even out of the country.

Read the West Ranch Beacon here.

Read latest update: Jessica Selva's article, "Stevenson Ranch murder unsolved" in The Signal, Santa Clarita Valley News

Credit Repair Do It Yourself or Hire an Expert?


In our opinion credit repair law firms like Lexington Credit (read: dispute mill) and many credit repair e-books and guides are often scams and rip-offs. Our video below will explain how they are scamming you. There are excellent credit repair companies, it's just that Lexington Law is not one of them.

If you want to hire a credit repair company to do the work for you, your best bet is National Credit Guidance. They have been helping good folks with bad credit for over 23 years. Their fees are very reasonable PLUS you pay only after the work is done.

You will also discover why credit repair software is the best option to fix your credit fast if you want to do your own credit repair.

Credit Repair Magic is much cheaper than a dispute mill law firm like Lexington Law, much more effective than any credit repair e-book or guide.

Credit repair review sites rate Credit Repair Magic #1 for value, simplicity and ease of use. Click this link to find out why, Credit Repair Magic Website.

Credit Repair Disputes

Credit Repair Disputes
By Chuck Rosseel

Today I am going to help you understand what a credit reporting agency does after you submit your credit dispute to them, and why persistence and perseverance are so important for your credit repair success. Under the Fair Credit Reporting Act a credit reporting agency is required to research your dispute with the source of the information. The credit bureau should check the entire record of the account in question and compare it with what they reported. This would allow them to make the appropriate changes and return a corrected, accurate credit report to you, the consumer, within thirty days.

However, the credit bureaus never do this. What they actually do with your credit dispute is shoddy and shocking.

Credit Repair - The Good, The Bad, The Ugly.

Credit Repair Software is a Great Way to Do It Yourself.

There are basically four ways to repair your credit. Here they are, from good to ugly:

Good and Bad: Clueless Credit Repair Services (dispute mills)

Although, it can be tempting to simply hire a credit repair company to do the credit repair work for you, you must choose wisely to find a competent credit repair firm. They do exist, the best one is National Credit Guidance, it's just difficult to find a credit repair firm that knows all the latest techniques to repair bad credit. Most Lexington Law type credit repair services, have a dirty little secret they don't want you to know.
 
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