Attorney General goes after credit repair scammers

FORT WAYNE, Ind. (WANE) - Attorney General Greg Zoeller made an appearance at the Allen County Courthouse in Fort Wayne Thursday morning to shine the spotlight on illegal credit repair offers after his office received more consumer complaints in 2010 against credit services organizations than it did for the entire 2009 year.

According to the Attorney General’s office, one of those complaints has surfaced in a lawsuit that was filed in Kosciusko County against a for-profit budget management company.

The company involved in the suit is owned and operated by Bruce D. Atherton, an attorney from Louisville, Ky.

Zoeller’s complaint claims Atherton deceived a Milford, Ind. family into paying him hundreds of dollars for budget management services.

Under Indiana law, a budget management company is required to have a license on file with the Indiana Department of Finance which the Attorney General’s suit claims Atherton failed to do.

The Attorney General’s office received 87 consumer complaints against credit services organizations including debt consolidation and debt settlement companies so far this year, already surpassing the total number complaints in 2009 which was 69.

“These credit repair scams are making it harder and harder for Hoosiers to get back on their feet,” Zoeller said. “I appreciate the support the General Assembly has provided by passing new laws that will make it harder for these operations to float under the radar.”

A new Indiana consumer protection law that took effect on July 1 requires all debt management and debt consolidation companies to register a $25,000 surety bond with the Attorney General’s office.

The company’s bond acts as an insurance policy for consumers in the event the company fails to perform the services and does not provide a refund. Consumers can contact the Attorney General’s office to confirm whether a credit repair company has the necessary bond or not. If they do not, the company would be operating in the state illegally and may be violating other consumer protection laws.

For Hoosiers with overwhelming debt, it is impossible to ignore the endless offers on television and radio, in newspapers and online that promise to fix bad credit easily and fast. The reality is these promises are misleading and often the companies are operating illegally. Victims of these scams often lose hundreds or thousands of dollars and their credit is no better off.

Atherton is currently facing federal criminal charges for mail and wire fraud. He was also indicted on criminal charges in New Jersey for financial facilitation of criminal activity, theft by deception and conspiracy.

The Kentucky Bar Association suspended his law license in September 2009.

Consumers considering hiring a credit repair service should keep in mind the following five red flags that indicate a scam:

1. The company wants you to pay for credit repair services before they provide any services.

2. The company doesn’t tell you your rights and what you can do for yourself for free.

3. The company recommends that you don’t contact any of the three major national consumer reporting companies (Equifax, Experian, and TransUnion) directly.

4. The company tells you they can get rid of most or all the negative credit information in your credit report, even if the information is accurate and current.

5. The company suggests that you apply for an Employer Identification Number to use instead of your Social Security number so you can invent a “new” credit identity – and then, a new credit report.

Zoeller recommends Hoosiers avoid for-profit companies for credit counseling and reminds Hoosiers that repairing credit takes time, effort and a personal debt repayment plan.

The National Foundation for Credit Counseling certifies legitimate non-profit credit counseling services. In the Fort Wayne area, consumers can contact the Consumer Credit Counseling Service of Northeastern Indiana by calling 1-800-432-0420. Statewide, Momentive Consumer Credit Counseling Service is available by calling 1-888-711-7227.

To file a complaint or to confirm whether a credit service organization has a surety bond on file, call the Attorney General’s Consumer Protection Division at 1-800-382-5516.

A copy of the complaint filed against Bruce D. Atherton will be available on the Attorney General’s website here: http://12.186.81.50/cpd/enforcement/