The Federal Trade Commission has charged a credit repair company and its owner with violating federal law by falsely promising to remove derogatory information from consumers' credit reports – even if the information is accurate and not obsolete.

At the FTC's request, a federal court issued a temporary order stopping the defendants' practices until the conclusion of the case. The agency seeks a final court order to stop the violations and make the defendants forfeit their gains and pay restitution to consumers.

The FTC's complaint alleges that Payneless Credit Repair LLC and its owner, Lesley L. Payne, both located in Richardson, Texas, make the following claims on the company's Web site, www.paynecreditrepair.com:

"Fast, Legal, Effective, CREDIT REPORT REPAIR . . ."

"We will fight to remove negative items from your credit reports, so you can improve your credit score. No matter what type of negative and damaging information is on your credit report, whether bankruptcy, charge-offs, late payments, or anything in between we will challenge it according to the law. We have developed the most effective and appropriate legal strategies to remove negative items from your credit report."

The defendants also advertise in classified ads in The Dallas Morning News and in local online Yellow Pages listings. The FTC's complaint states that in discussions with consumers, Payne promises results that far exceed the written claims, offers a "100% money-back guarantee," and misrepresents that her company is licensed and bonded. The defendants ask consumers to sign a contract and pay an advance fee, typically ranging from $500 to $1,000, but sometimes as much as $2,500. Payne often meets with consumers in temporary office suites, at the consumers' workplace, in restaurants and even in parking lots.

As stated in the complaint, the defendants do little, if anything, to fulfill their promises. Consumers find it difficult to reach the defendants to complain. Consumers' e-mails and voice-mails often go unanswered and they find that the defendants' temporary offices have been vacated with no forwarding address. Consumers who reach the defendants are given a variety of excuses for why their promised results have not been achieved, and those who persist are told to stop and are often threatened with lawsuits. The defendants almost always deny consumers' refund requests.

The company did not return calls by Collections & Credit Risk seeking comment.

The FTC charged the defendants with violating the Credit Repair Organizations Act and the FTC Act by falsely representing that they can improve consumers' credit reports by permanently removing negative information, even when the information is accurate and not obsolete.

The agency also charged them with violating CROA by requiring advance payment for credit repair services; not including in contracts conspicuous statements about the consumer's right to cancel without penalty or obligation before the third business day after a contract is signed; and not providing, before contracts are signed, the written "Notice of Cancellation" and statement of consumer credit file rights under state and federal law. In addition, the defendants have been charged with violating the FTC Act by falsely stating that the company is licensed and bonded with the state of Texas. In fact, the defendants have not registered as a "credit services organization" with the Texas Secretary of State, as Texas law requires.

According to FTC officials, "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 – for free.

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