Busines

EXHIBIT

3

Southtown Economist NewsP

Credit repair

Borrowers beware: Offers to era

Credit repair firms have been around since the early 1980s, but have recently expanded their efforts to lure those with poor or no credit histories as their clients. Some firms promise to wipe a credit record clean that's all but impossible -or to obtain a Visa or MasterCard for those who have been turned down in previous applications.

"The problem is that some of the credit repair firms can be of genuine help to consumers who don't know their rights or the reason their credit record is poor," said Robert Steeves, deputy director of the U.S. Office of Consumer Affairs in Washington, D.C.

"Where we part company is when credit repair firms begin promising impossible things," Steeves continued. "No one can erase your credit record. If that record is wrong, then lots of people can be of some help."

But consumers unsure of their rights under the Fair Credit Reporting Act can get that information elsewhere - by writing the Federal Trade Commission, for example - and avoid the fees that credit repair firms charge, which can range from several hundred dollars to $2,000 or more.

"Sure, you can do it yourself, but you can also cut your own hair yourself," Steeves replied. "You have to make sure that the value you expect for the fee you pay is realistic. Make sure what you think is going to happen is actually going to happen."

Basically, consumers are entitled to examine their credit file without charge if they have been turned down for credit in the last 30 days, or at any time for a fee (around $10-$15). Challenged data must be rechecked. Consumers may also include a written statement of 100 words or less, giving their side of a particular credit dispute: the credit

taking advantage of people who are in need and can least afford to

Business Matters waste money," Boan said. "There

reporting bureau must help you
write it if you ask them.

A common tactic used by credit
repair firms is to request a copy of
an individual's credit background
from a credit reporting bureau,
then deluge the bureau with verifi-
cation requests of the data it con-
tains. Under the law, the credit bu-
reau must recheck disputed facts
with credit grantors within 30 days,
or remove that data from the indi-
vidual's file.

"It's an old tactic of intimida-
tion," said Geri Schanz, manager of
media relations for TRW's informa-
tion services division - one of the
nation's largest credit reporting bu-
reaus. "If we receive a request dis-
puting most or all of the data on an
account, the law allows us to con-
sider that a frivolous request. We
simply return the letter."

But snowing under a credit re-
porting bureau with verification re-
quests can occasionally work
only for a short time.

if

"What happens is that negative data that can't be checked in a month's time is dropped, but only temporarily, until the new data tapes come in from the credit grantor." said Marvin Kaplan, spokesman for Associated Credit Bureaus, a national trade association for the industry. "So you haven't wiped out the fact of lateness in payment. It comes right back in a month."

Scott Boan, a spokesman in the Chicago headquarters of Trans Union Credit Information Co. the credit bureau covering most state residents is clearly a foe of credit repair

"They're selling a bill of goods,

just is no such thing as legitimate credit repair."

Several states have already passed legislation regulating the credit repair business. On the federal level, U.S. Rep. Frank Annunzio, D-11th, has introduced the Credit Repair Organizations Act. The bill would force credit repair firms to fully disclose their services.

"Some of these clinics charge as much as $2,000 to provide services that the consumer is entitled to for nothing," Annunzio said in a statement issued earlier this year. "Credit repair clinics which promise to clean up consumer's bad credit ratings do little but relieve consumers of their cash.'

Earlier this year, Cook County State's Attorney Richard M. Daley filed suit to freeze the assets of a Westmont credit repair agency, Nationwide Credit Services, and obtain refunds for those allegedly defrauded by the firm. The suit charged that Nationwide misled consumers by promising to erase negative information from their files.

Another common come-on from credit repair agencies is the promise to secure a Visa or MasterCard for people with poor histories. And often they can by having the consumer apply for a collateralized card, one whose credit limit is based by a deposit made by the cardholder and held by the bank offering the card.

Collateralized or "secure" credit cards are a sound tool for rebuild

ing damaged credit - but they can be obtained without the help of a credit repair firm. For a list of banks offering secure credit cards, write to The Bankcard Holders of America, 460 Spring Place, Suite 1000, Herndon, VA 22070.

One final note: credit repair agencies should not be confused with low-cost, non-profit consumer credit counseling services (CCCS). These agencies charge a modest fee (usually less than $25) to help consumers budget their finances and negotiate repayment schedules. For more information on CCCS, write to the National Foundation for Consumer Credit, 8701 Georgia Ave., Silver Spring, MD 20910.

MATTOX Advises medIA TO BEWARE CREDIT REPAIR ADS Attorney General Jim Mattox Thursday warned consumers and the media to beware of credit repair businesses that promise to wipe clean consumers' credit ratings and obtain credit cards for consumers no matter what their credit history.

Mattox mailed advisories to advertising departments of all Texas media, where many of the credit repair businesses are advertising, and to about 90 credit repair businesses in Texas, both registered and unregistered.

"We've seen a lot of publicity lately about the proliferation of credit repair services," Mattox said, "and my Consumer Protection Division is receiving an increasing number of complaints about these businesses."

"During the past 12 months, we've received approximately 300 consumer complaints about credit repair businesses and filed half a dozen lawsuits against unprincipled businesses," the Attorney General said. "It's a new and growing business and one that consumers need to be wary of because they can easily get ripped off if they're not careful."

SEP 09 '88 13:45 ASSOCIATED CREDIT BUREAUS, INC.

P.4/8

"Unfortunately, people who need help with their credit are often desperate and make easy targets for unscrupulous businesses that promise them the moon and charge them exorbitant fees without delivering what the consumers are led to believe they'll get."

"For instance, these companies fail to tell people that bad credit information can only be removed from their credit histories if it's inaccurate or obsolete," Mattox said.

In response to the increasing number of complaints about credit repair services, the 70th session of the Texas legislature passed the Credit Services Organizations Act, which took effect one year ago. Businesses covered by the new law include those that provide services to improve a consumer's credit history or credit rating, obtain an extension of credit for a consumer or provide advice on how to improve or obtain credit.

Under the law, credit repair businesses must register with the Secretary of State and post a $10,000 surety bond.

Credit repair businesses which violate the new law also violate the Texas Deceptive Trade Practices/Consumer Protection Act. In his ad advisory to Texas media, Mattox warned media advertising departments to carefully screen potential advertisers in the credit repair business before accepting the ads. He suggested they obtain answers to four important questions before accepting ads to make sure they do not contribute to false, misleading advertising on their stations and in their newspapers. The questions are:

1. Does the business fall into the category of a credit repair service?

SEP 09 '88 13:46 ASSOCIATED CREDIT BUREAUS, INC.

P.5/8

bond?

2. Can the company provide copies of its registration and surety

3. Does the business advertise that it will "erase bad credit" or words to that effect?

4. Does the business advertise that it will provide a person with a credit card, regardless of that person's credit rating or history? The ad advisory notes that media accepting and running deceptive advertising may be sued under Texas' consumer protection law if they knowingly accept false or misleading ads.

Mattox also mailed business advisories to approximately 90 credit repair businesses around the state. Some of the businesses are properly registered under the new law; some of them are not but are businesses that Mattox's office has received complaints on from consumers and other credit-related businesses.

The business advisory to the credit repair services explains the law to them and warning them not to violate the law.