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Consumers Sue Credit Repair Company for Fraudulent Schemes

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Case ID: 4007 | Credit / Debt | 12/07/2004

A class action lawsuit has been filed in the Eastern District Court of Pennsylvania against the Family Credit Counseling Corporation for violations of the Federal Credit Repair Organization Act. Class members seek compensatory, statutory and punitive damages, injunctive relief, attorney's fees and costs of the litigation.

This is a consumer class action brought on behalf of consumers who have entered into debt management agreements with the Family Credit Counseling Corporation and the Debt Solutions Foundation, Inc. for debt consolidation and debt management services.

The complaint alleges that the defendants have engaged in an on-going fraudulent scheme by which they obtain service fees and monthly payments from consumers under the false pretenses that the monies received will be paid to the consumers' creditors. However, the complaint states that the defendants retain the payments for their own use, never pay the creditors or keep the payments for several months before making those payments. The defendants charge consumers a sign up fee of $199.00 to participate in the program and then charge a $6.00 service fee for each creditor who is scheduled to receive a payment.


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