A federal court today 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.
The Federal Trade Commission in February 2009 charged seven companies and three officers with making false promises that they would improve consumers’ credit scores by removing negative information such as late payments, chargeoffs, collection information, 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 credit repair defendants are: United Credit Adjusters Inc., doing business as (d/b/a) United Credit Adjustors and UCA; United Credit Adjustors Inc. [note different spelling], 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.; and United Money Tree Inc. The principals named as defendants are 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 U.S. District Court for the District of New Jersey entered default judgments against all of the defendants except Serino, also known as Jerry Serino, after they failed to respond to the lawsuit.
The court 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.
Other details of the order include prohibiting the credit repair companies and their owners from selling credit repair services, and banning the loan modification companies and their individual owners from selling mortgage loan modification and foreclosure relief services.
The order further 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. Finally, the order bars the defendants from misleading consumers about any good or service - such as refund terms, government affiliation and total cost.
