A Texas-based company owned and operated by a husband and wife team will pay $400,000 of a $2.35 million civil penalty to settle charges it violated federal law by lying to consumer reporting agencies and charging consumers fees before providing its services.

RMCN Credit Services Inc. and owners Doug and Julie Parker were charged by the Federal Trade Commission with violating the Credit Repair Organizations Act by charging upfront fees for a six-month program to improve consumers’ credit ratings.

The company allegedly made numerous false statements to credit bureaus disputing the accuracy of negative information in consumers’ credit reports. In letters to credit bureaus designed to appear as if they were from consumers - letters RMCN did not show consumers - the company typically disputed all negative credit report information, regardless of the accuracy, according to the FTC complaint, which was filed by the U.S. Department of Justice.

The defendants didn’t admit any wrongdoing.

The FTC alleged RMCN, one of the nation’s largest credit repair companies, kept sending the deceptive dispute letters to credit bureaus even after it received detailed billing histories or signed contracts from creditors proving the reports were accurate. RMCN also falsely told consumers that federal law allowed it to dispute accurate credit report information, and that credit bureaus must "prove it or remove it." It also charged consumers up to $2,000 before providing any service.

The court order bars RMCN and its owners from violating any Credit Repair Organizations Act provision, and specifically from making false or misleading statements to consumer reporting agencies and charging consumers advance fees for credit repair services. The order prohibits the defendants from sending letters to consumer reporting agencies or creditors unless consumers review and attest to the accuracy of the letters.

Finally, it requires RMCN to send letters to all existing customers notifying them of the FTC’s suit and offering them a right to cancel their contract with RMCN and owe no money to the company.  

"The Credit Repair Organizations Act protects both individual consumers and the integrity of the credit reporting system,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection. "The FTC will take action against unscrupulous credit repair companies whether they violate CROA by deceiving consumers or by lying to credit bureaus."

The $2.35 million civil penalty will be partially suspended based on the defendants' inability to pay, but only after they pay $400,000, in two installments, within nine months of when the court enters the order.

The defendants were charged by the FTC in October 2011.

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