Attorney Generel Ken Salazar Obtains Judgment Against "Credit Repair" Company

Denver--Attorney General Ken Salazar announced today that his office obtained a judgment of nearly $1 million against an illegal “credit repair” business, Credit Corrections, LLC, and its principal, Mary “Joey” Jensen. The judgment was obtained in a lawsuit his office filed in June 2003 (Colorado ex rel. Salazar v. Credit Corrections, LLC, Case No. 03CV4264, Denver District Court).

Credit Corrections, which originally was based in Wheat Ridge, Colorado, was engaged in what is called “credit repair”. It would contract with consumers and charge them a fee for fixing or restoring the consumers’ bad credit reports. However, Credit Corrections did not comply with federal or state law regulating the credit repair industry. These laws, the federal Credit Repair Organization Act and the Colorado Credit Services Organization Act, impose a number of requirements upon businesses engaged in credit repair. Among these requirements are (1) prohibiting the credit repair business from collecting its fees in advance of completing its services (unless it is a duly registered not-for-profit company), (2) providing the consumer a 5-day right to cancel the contract, and (3) providing the consumer with additional notices and disclosures of the consumer’s rights.

Approximately 380 Colorado consumers that the Attorney General's Office is aware of were "customers" of Credit Corrections, and approximately $229,000 in advance fees were collected by it.

“Credit repair is growing concern," Attorney General Salazar said. "Consumers need to be aware of their rights and the responsibilities of credit repair services."

Credit Corrections was first investigated by the Administrator of the Uniform Consumer Credit Code, an agency within the Attorney General’s office and which has enforcement jurisdiction over the Colorado Credit Services Organization Act, in 2001. As a result of that investigation, Credit Corrections entered into an Assurance of Discontinuance pursuant to which it agreed to cease and desist from engaging in its unlawful credit repair business and pay a $10,000 penalty. However, Credit Corrections violated this agreement and the Attorney General’s office subsequently brought suit against it. The complaint alleged violations of the state and federal credit repair statutes as well as the Colorado Consumer Protection Act.

Defendants failed to respond to the state's complaint. The judgment entered by the district court requires Credit Corrections and its principal to pay damages and penalties of nearly $1 million. It further permanently enjoins and prohibits defendants from engaging in their credit repair business in violation of state or federal law. It also awards the Attorney General’s office its costs and attorney’s fees incurred in prosecuting the action.

Attorney General Salazar advises consumers with credit problems to avoid companies claiming they can “repair” or “erase” bad credit. The following is information regarding consumer debt in general:

• Negative credit information, if accurate, may remain on a credit report for seven years and then is automatically removed.
• Bankruptcy information remains on a credit report for ten years.
• Credit repair companies cannot legally provide a permanent fix to remove accurate credit information.
• Some companies advise consumers to use new social security numbers or employer identification numbers but doing so is a federal crime.
• If erroneous information is listed on a credit report, consumers can correct the problem themselves at no charge by sending a written explanation to the consumer reporting agency and including copies of paid bills and identification information. Consumer reporting agencies then have thirty days to reinvestigate the consumer’s claim and correct their records.
• Colorado consumers have a right to order one free copy of their credit report each year. Consumers can use this opportunity to check their credit reports for errors.