Markets Wired

At the Federal Trade Commission’s request, a federal court has banned eight companies and their principals from selling credit repair and mortgage relief services, and ordered them to pay more than $7.5 million for deceiving consumers throughout the United States.

In February 2009, the FTC charged seven of the companies and three officers with making false promises that they would improve consumers’ credit scores by removing negative information such as late payments, charge-offs, collections, inquiries, delinquencies, judgments, and accounts discharged in bankruptcy. According to the FTC’s complaint, the defendants charged consumers up to $2,000, including illegally charging an advance payment of $300, and failed to provide written contracts and other materials required by law. In August 2009, the FTC added defendants to the case, alleging that they and one of the original defendants falsely claimed they would help consumers get mortgage loan modifications or stop foreclosure in all or virtually all instances. The court entered default judgments against all of the defendants except Gerald Serino, also known as Jerry Serino, after they failed to respond to the lawsuit.

The credit repair defendants are United Credit Adjusters, Inc., doing business as United Credit Adjustors and UCA; United Credit Adjustors, Inc., d/b/a United Credit Adjusters and UCA; United Counseling Association, Inc., d/b/a UCA; Bankruptcy Masters Corp., National Bankruptcy Services Corp., Federal Debt Solutions, Ltd., United Money Tree, Inc., Ahron E. Henoch, Ezra Rishty, and Gerald Serino. The loan modification defendants are The Loan Modification Shop, Ltd., Casey Lynn Cohen, a/k/a Casey Lynn Collins, and Rishty.

The court order prohibits the credit repair companies and their owners from selling credit repair services, and it bans the loan modification companies and their individual owners from selling mortgage loan modification and foreclosure relief services. The order also prohibits the defendants from misleading consumers about financial goods and services, such as loan terms or rates, how much a consumer will save by enrolling in a debt relief service, and credit terms other than those a lender actually offers. The order also bars the defendants from misleading consumers about any good or service, such as refund terms, government affiliation, and total cost.

In addition, the order bars the defendants from trying to collect payment from their customers, and from selling or otherwise disclosing their customers’ personal or financial information. The order imposes a $7,500,334 judgment against the credit repair defendants, and a $32,710 judgment against the loan modification defendants. Litigation will continue against Serino.

The default order was entered in the U.S. District Court for the District of New Jersey on February 4, 2010.

The Federal Trade Commission works for consumers 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, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,800 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s Web site provides free information on a variety of consumer topics.

(United Credit Adjusters)