A small Dallas-based company is challenging some of the biggest players in the credit bureau and counseling business in a lawsuit that alleges monopolistic and collusive practices are threatening the company's existence.

The lawsuit, filed last month by Masters of Money and Credit Corp., a six-year-old credit repair operation, names TRW Inc., Trans Union Corp., Equifax Inc., the National Foundation for Consumer Credit and its Dallas affiliate, and Texaco as defendants.

Masters of Money describes itself as a credit "restoration" and budget counseling company that helps people who have credit problems.

Of the defendants, so far only TRW has responded to the allegations.

The Orange, Calif.-based credit bureau considers Masters of Money a "credit repair clinic," a pariah in the credit bureau industry.

"Companies that we accept as subscribers must meet TRW's stringent security and privacy standards, and Masters of Money does not," said a spokeswoman for TRW.

As a result, TRW refuses to sell consumer credit reports to the company.

In fact, the Federal Trade Commission, the three credit bureaus, and their association, Associated Credit Bureaus Inc., are working together on a number of initiatives to make it more difficult for credit repair clinics to operate.

FTC attorney David Medine said, "We take the position that we have never seen a legitimate credit repair company."

The FTC developed a brochure warning consumers about scams credit repair clinics may use. Ultimately, the FTC advises consumers that credit repair companies are unnecessary because consumers "can do anything a credit repair company can do."

About 25% of the calls Equifax receives from consumers who dispute information in their credit file are generated by credit repair clinics.

In a recent interview, John A. Ford, vice president for privacy and external affairs at Equifax, said, "Some clinics advise people to dispute all adverse information in their file, which is a scam against people who are not experienced in credit matters."

Credit bureaus are required to investigate all disputed information within 30 days of a consumer's request. If the bureaus are unable to verify the accuracy of their files after 30 days, they must remove the negative information.

Credit clinics' tactics are viewed by the industry and the FTC as harassment.

Even Bruce J. Danielson, founder and chairman of Masters of Money, conceded that the vast majority of his colleagues in the credit repair business are not legitimate. But he said Masters of Money and "maybe four other companies" were the exceptions.

Masters of Money charges between $250 and $4,000 for its services, which include budget counseling, removal of negative credit file information, and mortgage loan assistance.

Mr. Danielson said his company also negotiates with lenders to reduce interest rates and late payments clients owe creditors.

Unlike the National Foundation of Consumer Credit and its affiliates, Masters of Money will not collect money from clients to repay lenders in what is called a debt management program.

The lawsuit states that the foundation and its members "have entered into express or implied agreements with various credit grantors, including Texaco, to exclude or prevent other competing credit counseling agencies from providing similar services to consumers."

The consumer credit foundation and its affiliates also face a lawsuit filed in 1994 by 13 independent credit counselors, who claim similarly that the foundation is monopolistic.

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