Attorney General Warns Of ‘Credit Repair’ Scams

TALLAHASSEE, FL – LAWFUEL – Legal Newswire – Attorney General Bill McCollum today issued a
consumer advisory warning Floridians about the increasing number of credit repair scams and simultaneously announced that his office’s Economic Crimes
Division filed two lawsuits today, one against a Broward County attorney
and one against a Clay County couple. The lawsuits allege the Broward
attorney deceptively marketed misleading debt management services and the
Clay County couple charged egregious fees for debt negotiation services
that were never provided.

“Consumers who are trying to reduce or eliminate debt are working
toward an admirable goal and it is unconscionable to take advantage of
these efforts,” said Attorney General McCollum. “Florida citizens should
always be wary of companies or individuals who are making unreasonable
promises or demands, either to restore credit or reduce debt.”

Laura L. Hess of Coral Springs, her Broward County law firm and two
other Florida-based companies she controls are named in the first lawsuit,
which states Hess allegedly signed thousands of credit card debtors up for
debt management services, claiming the law firm would provide legal
services to cancel debts for pennies on the dollar. Representatives of Hess
allegedly told consumers that the companies had audited the consumers’
accounts and found numerous violations under the Fair Credit Billing Act,
then sent notices to creditors disputing all charges. Consumers were
falsely told that once these notices were issued, the consumers did not
have to pay creditors and creditors could not sue or otherwise take action
against them. The Attorney General’s lawsuit alleges Hess’s deception led
to lawsuits and other actions against several debtors.

The second lawsuit, filed today in Clay County Circuit Court, alleges
John J. Hacker and Christa L. Caparella, operating as United Debt
Solutions, promised consumers that they could reduce their debts by 50
percent or more and demanded fees that greatly exceeded legal limits for
debt negotiators. According to the lawsuit, Hacker and Caparella instructed
customers to stop paying creditors and instead divert what they would have
paid to the couple. Instead of contacting creditors to negotiate debt
reductions, the lawsuit alleges the two simply pocketed the money. Requests
for refunds were ignored and when their business ran short on funds, Hacker
and Caparella debited their customers’ accounts without permission. The
Attorney General’s Office has received nearly 100 complaints about the pair
from all over the United States.

The Attorney General reminds consumers that they are entitled to one
free credit report every 12 months, available at, and should beware of
companies that offer quick solutions for clearing bad credit. Credit repair
companies claiming they can remove negative information from a credit
report are not being honest. Accurate information within seven years of the
reporting period, or 10 years if the information relates to a bankruptcy,
cannot be erased from a credit report. The only information that can be
changed are items that are actually wrong or are after the reporting date.

Some credit repair schemes offer to “hide” bad credit by helping
consumers establish a new credit identity. The company may direct the
consumer to apply for an Employer Identification Number (EIN) from the
Internal Revenue Service, and to use the EIN in place of his or her Social
Security number when applying for credit. This practice, known as file
segregation, is a federal crime.

To avoid these and other credit repair scams, Attorney General
McCollum offered the following tips for consumers who may be considering
credit repair services:

– Contact creditors if scheduled payments will be missed and ask local
credit counseling services to develop payment plans. These nonprofit groups
offer credit guidance to consumers and their services are available at
little or no cost. Your employer, credit union, or housing authority may
also offer other no-cost credit counseling programs.

– Request a copy of your credit report and review it for mistakes. You
are entitled to a free copy of your credit report if you’ve been denied
credit, insurance or employment and request the report within 60 days of
notice, or if you can prove that (1) you’re unemployed and plan to look for
a job within 60 days, (2) you’re on welfare, or (3) your report is
inaccurate because of fraud. Otherwise, the credit bureaus may charge you a
small fee for a copy of your credit report.

– If there are mistakes on your credit report, contact the credit
bureau and request a dispute form. Submit the form with as much information
as possible about the inaccurate information. The bureau must reinvestigate
the matter and delete or correct any information which they are unable to
verify. If the dispute still exists, consumers can file a written
explanation which must be included in the credit report.

– Contact the Attorney General’s Office at 1-866-966-7226 or online at to determine if there are complaints or legal
actions pending against the company you are considering.

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