A credit repair company in Montgomery, Alabama was closed down in October of 2017 for deceptive and illegal practices. According to the Alabama Attorney General’s office Scott’s Credit Repair is closed down permanently. The owners, John and Krystal Scott, are prohibited from consumer credit repair work or consumer finance work. Additionally, they have been prohibited from owning or managing a business in the state of Alabama.
The Alabama Attorney General’s office complaint alleges that Scott’s Credit Repair falsely advertised that they could help consumers buy expensive homes and cars. In addition, the complaint and consent to judgment – which the defendant signed – alleges other violations of the Credit Repair Organizations Act such as payment for services not yet rendered. In one case, Mr. Scott used the excuse that he had already done work for the client as to why she could not cancel the contract with them in the legally permitted three days. Additionally, they promised to get their clients scores in excess of 700 despite not being able to guarantee such a result – again something that is not permitted under the laws governing credit repair.
Scott’s Credit Repair also, according to the complaint, regularly engaged in the practice of “jamming” – where all negative information on the credit report is disputed all at once in hopes that some, if not most, will come off because they didn’t get investigated by the consumer reporting agency before the 30-day deadline. This practice will give a false increase to the credit score as often times negative items that are legitimate but were removed by this method will be rereported by the creditor.
The fees paid by Scott’s Credit Repair clients were not always the ones that had been advertised, according to the complaint. Several clients were charged more than the original quoted amount without an explanation of additional fees. Additionally, the Scotts paid a customer to write a positive review for them on social media and they disseminated it knowing it was false.
Despite having signed the complaint and consent to judgment, Mr. Scott, when he was contacted by the Montgomery, Alabama NBC affiliate, denied all charges. He also stated that they were not doing anything wrong and plans to fight the action in court.
Credit repair companies are not allowed, by law, to engage in unfair and deceptive business practices. Additionally, they are not able to guarantee a specific credit score – they may however give a range that credit scores may increase while working with their clients. The practice of “jamming” is also prohibited – credit repair organizations should communicate with their clients on a regular basis to ensure they are only disputing invalid, inaccurate, or out of date information. Finally, credit repair organizations may not charge up front for services and should let the consumer know what the fees are – this is where many credit repair organizations get in trouble.
Picture Credit: geralt