How can I get my money back if I have been a victim of a credit repair scam?
Full Question:
Answer:
The FTC has filed a lawsuit against RTC and last October a judge froze their assets. The court found good cause to believe that the "Defendants have engaged and are
continuing to engage in acts and practices that violate Section 5(a) of the FTC Act, 15 U.S.C. 8
45(a), and the Credit Repair Organizations Act ("CROA) 15 U.S.C. $5 1679-
such, the Commission is likely to prevail on the merits of this action."
The court specifically found it likely the FTC will prove RTC guilty of:
A. Charging or receiving money or other valuable consideration for the performance
of credit repair services that the Defendants have agreed to perform before such
services were fully performed, in violation of 15 U.S.C. 8 1679b(b);
B. Failing to provide a written statement of "Consumer Credit File Rights Under
State and Federal Law," in the form and manner required by the Credit Repair
Organizations Act, to consumers before any contract or agreement was executed,
in violation of 15 U.S.C. 3 1679c(a);
C. Failing to include on their consumer contracts conspicuous statements regarding
the consumers' right to cancel the contracts without penalty or obligation at any
time before the third business day after the date on which the consumers signed
the contracts, in violation of 15 U.S.C. 3 1679d(b)(4);
D. Failing to provide a written "Notice of Cancellation," in the form and manner
required by the Credit Repair Organizations Act, to consumers before any
contract or agreement was executed, in violation of 15 U.S.C. 3 1679e(b);
E. Making any untrue or misleading statements to induce consumers to purchase
their credit repair services in violation of 15 U.S.C. 8 1679b(a)(3), including, but
not limited to the representations:
a. that the Defendants can remove negative information from consumers'
credit reports, even where such information is accurate and not obsolete;
and
b. that they will substantially improve for consumers who respond to their
advertisements their credit scores "into the 700s" within 30 days or other
short period of time."
The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint visit the FTC's online Complaint Assistant at https://www.ftccomplaintassistant.gov/ or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,500 civil and criminal law enforcement agencies in the U.S. and abroad. I recommend you contact the FTC and your local attorney general.
If you wish to file a complaint against the company, a claim based on a breach of contract typically asks for remedies that are not designed to punish the breaching party. The five basic remedies for breach of contract include the following: money damages, restitution, rescission, reformation, and specific performance. A money damage award includes a sum of money that is given as compensation for financial losses caused by a breach of contract. Parties injured by a breach are entitled to the benefit of the bargain they entered, or the net gain that would have accrued but for the breach. The type of breach governs the extent of damages that may be recovered. Restitution is a remedy designed to restore the injured party to the position occupied prior to the formation of the contract. Parties seeking restitution may not request to be compensated for lost profits or other earnings caused by a breach. Instead, restitution aims at returning to the plaintiff any money or property given to the defendant under the contract. Plaintiffs typically seek restitution when contracts they have entered are voided by courts due to a defendant's incompetence or incapacity. Rescission is the name for the remedy that terminates the contractual duties of both parties, while reformation is the name for the remedy that allows courts to change the substance of a contract to correct inequities that were suffered. In order to have a rescission, both parties to the contract must be placed in the position they occupied before the contract was made. Courts have held that a party may rescind a contract for fraud, incapacity, duress, undue influence, material breach in performance of a promise, or mistake, among other grounds. Specific performance is an equitable remedy that compels one party to perform, as nearly as practicable, his or her duties specified by the contract. Specific performance is available only when money damages are inadequate to compensate the plaintiff for the breach. Punitive damages are damages awarded in a lawsuit as a punishment, and are often asked for in cases involving fraud. To prove fraud, it must be shown that the defendant knowinlgy made a false promise, intended another to act in reliance on that promise, and that reliance caused harm.
Promissory estoppel is a term used in contract law that applies where, although there may not otherwise be an enforceable contract, because one party has relied on the promise of the other, it would be unfair not to enforce the agreement. Promissory estoppel arises from a promise which the promisor should reasonably expect to induce action or forebearance of a definite and substantial character on the part of the promisee and which does induce such action or forebearance in binding if injustice can be avoided only by enforcement of the promise.
Detrimental reliance is a term commonly used to force another to perform their obligations under a contract, using the theory of promissory estoppel. Promissory estoppel may apply when a promise was made; reliance on the promise was reasonable or foreseeable; there was actual and reasonable reliance on the promise; the reliance was detrimental; and injustice can only be prevented by enforcing the promise. Detrimental reliance must be shown to involve reliance that is reasonable, which is a determination made on an individual case-by-case basis, taking all factors into consideration. Detrimental means that some type of harm is suffered.
Reasonable reliance is usually referred to as a theory of recovery in contract law. It was what a prudent person might believe and act upon based on something told by another. Sometimes a person acts in reliance on the promise of a profit or other benefit, only to learn that the statements or promises were either incorrect or were exaggerated. The one who acted to their detriment in reasonable reliance may recover damages for the costs of his/her actions or demand performance. Reasonable reliance connotes the use of the standard of ordinary and average person.
Damages awarded under the Credit Repair Organizations Act are as follows:
SEC. 409. CIVIL LIABILITY.(13)
(a) Liability Established.--Any person who fails to comply with any provision of this title with respect to any other person shall be liable to such person in an amount equal to the sum of the amounts determined under each of the following paragraphs:
(1) Actual damages.--The greater of--
(A) The amount of any actual damage sustained by such person as a result of such failure; or
(B) Any amount paid by the person to the credit repair organization.
(2) Punitive damages.--
(A) Individual actions.--In the case of any action by an individual, such additional amount as the court may allow.
(B) Class actions.--In the case of a class action, the sum of--
(i) The aggregate of the amount which the court may allow for each named plaintiff; and
(ii) The aggregate of the amount which the court may allow for each other class member, without regard to any minimum individual recovery.
(3) Attorneys' fees.--In the case of any successful action to enforce any liability under paragraph (1) or (2), the costs of the action, together with reasonable attorneys' fees.
(b) Factors to Be Considered in Awarding Punitive Damages.--In determining the amount of any liability of any credit repair organization under subsection (a)(2), the court shall consider, among other relevant factors--
(1) The frequency and persistence of noncompliance by the credit repair organization;
(2) The nature of the noncompliance;
(3) The extent to which such noncompliance was intentional; and
(4) In the case of any class action, the number of consumers adversely affected.