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CREDIT BUREAUS URGE CONGRESS TO REGULATE CREDIT CLINICS

 WASHINGTON, Oct. 20 /PRNewswire/ -- Barry Connelly, executive vice president of Associated Credit Bureaus, Inc. (ACB), urged Congress to pass proposed legislative language that would "put a halt to the excesses of credit clinics." He continued by saying, "Unless you make it against the law for people like this to take money from unsuspecting consumers through credit repair schemes, they will continue to rip people off, change names and locations and then search for more unsuspecting victims." Connelly testified before the House Banking Subcommittee on Consumer Credit and Insurance today.
 "Credit repair is an insidious and predatory scam that promises miracles to poor and unsophisticated consumers. Now their latest scam is to try to cloak themselves with legitimacy. This Congress and this committee shouldn't fall for it. Title II should have been passed five years ago by itself, and if it had, consumers might have saved millions of dollars," he added.
 As a typical example of how these credit clinics operate, Connelly submitted testimony on an organization called the National Credit Foundation (NCF). In a 30-minute advertisement run on television, NCF offers to help consumers who have experienced financial difficulty through the use of numerous misleading or false statements. For this service, it charges up to $500, which can be paid in cash or charged to a credit card. The National Credit Foundation is under investigation in at least one state for such practices.
 According to the U.S. Office of Consumer Affairs, credit card fraud and credit repair costs American consumers $3 billion a year. Connelly cited statements by both the Office of Consumer Affairs and the Federal Trade Commission which indicated credit clinics charge a fee for services which consumers can perform by themselves at no cost. In addition, these federal agencies note credit repair companies achieve little, if anything, in the way of results leaving the consumer less financially secure and more frustrated.
 Connelly said that ACB notifies the appropriate authorities whenever they are alerted to the operations of a credit clinic. Thirty states currently have laws regulating the activities of these organizations. Unfortunately many of these state laws have been ineffective or they lack substantial and meaningful enforcement, Connelly noted. He stressed the need for a federal law that will put some teeth into regulation and compliance.
 Connelly was testifying on H.R. 1015, the bill being considered by the Banking Subcommittee which would amend the Fair Credit Reporting Act. He commented that, with few exceptions, the credit reporting industry was already doing much of what the bill was proposing. New industry operating policies were adopted Aug. 1 of this year which dealt with the timeliness of responding to consumers, additional disclosure to consumers about when credit reports are used and initiatives to ensure the privacy of information in the credit report.
 ACB and its members do have some areas of disagreement with H.R. 1015, however. The litigious nature of liability for credit grantors which transmit data that is in error concerns the credit reporting industry, noted Connelly. Furthermore, H.R. 1015 fails to recognize the legitimate need for interstate business to have uniform regulation in all 50 states. The bill would also require credit bureaus to provide their product for free which concerns ACB's members. Finally, Connelly said H.R. 1015 discriminates against the legitimate use of direct marketing information by the credit reporting industry while allowing other sources to market the same data.
 Associated Credit Bureaus, Inc., is the trade association for the credit reporting industry. It represents over 800 credit bureaus nationwide.
 -0- 10/20/93
 /CONTACT: Norm Magnuson, director of public affairs, of Associated Credit Bureaus, 202-408-7406/


CO: Associated Credit Bureaus, Inc. ST: District of Columbia IN: FIN SU: LEG

DC-MH -- DC033 -- 4693 10/20/93 15:10 EDT
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Publication:PR Newswire
Date:Oct 20, 1993
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