Ken Paxton

Friday, June 22, 2007

Attorney General Abbott Reaches Settlement with Austin Credit Repair Service

AUSTIN The owner of a credit service organization agreed to pay $75,000 in civil penalties and attorneys’ fees for violating the Texas Deceptive Trade Practices Act. Last September, Texas Attorney General Greg Abbott charged Steve H. McIntosh, the owner of Austin Credit Doctor and America’s Credit Doctor, with unlawfully overstating his ability to improve consumers’ credit ratings.

According to court documents filed by the Office of the Attorney General, McIntosh also failed to comply with a law that requires credit service organizations to register with state authorities. The settlement follows a district court ruling last month finding McIntosh liable to the state for engaging in unlawful deceptive practices.

By prohibiting misleading promises and requiring credit counselors to register with the authorities, Texas offer important protections for consumer debtors, Attorney General Abbott said. In an age where consumer debt is more pervasive than ever before, we must take all necessary steps to protect struggling debtors from scams. Texans can rest assured that the Office of Attorney General will aggressively crack down on credit repair services that violate the law.

Between August 2004 and September 2006, McIntosh falsely claimed to operate a registered credit service organization, which he frequently called a credit repair service. During the same period, McIntosh also failed to register with the Texas Secretary of State and did not obtain a legally mandated surety bond.

Although the law only allows debtors to remove inaccurate or obsolete items from their credit reports, McIntosh’s companies falsely claimed they could remove items that were merely negative. McIntosh, who charged advance fees between $250 to $950 for individuals and up to $1,250 per couple for his credit restoration services, did not inform his clients about nonprofit credit counseling services, which is required under Texas law. Although the Texas Finance Code imposes a 180-day limit on credit restoration work, McIntosh often violated the law by completing the work after the limitation period expired.

Debtors in need of credit counseling services should get as much information as possible before hiring a credit repair specialist. Attorney General Abbott offered the following advice:

Be wary of companies guaranteeing 100 percent satisfaction on credit repair. In truth, repairing bad credit is neither easy nor quick.
Companies promising to fix negative items on credit reports are being deceptive and may not be licensed to do business. Only erroneous, inaccurate or obsolete (usually more than seven years old) debts are correctible.
Consumers should contact a credit bureau and inspect credit history. Consumers can repair errors on their own and need not spend hard-earned dollars on credit counselors.

Consumers who believe they have been defrauded by credit repair services may file complaints with the Office of Attorney General by calling toll-free (800) 252-8011, or consumers may file complaints online at