EXHIBIT 6

32

COMPANY NEWS

Pros, Cons Of Credit Clinics

Repair Claims Draw Scrutiny

By LEONARD SLOANE

Few things badevil modern com sumers more than a poor credit rat tag, erpecially when it is enfounded and they get treated as deadbeats

To clean slate, more and more people are turning to credit clinics companies that help comers dis pute and remove what they believe to be erroneous data from crudif burana files. More than 1,000 such credit clinics have sprung up across the country in recent years, charging free ranging from 25 to 12,000 for their services.

But while must credit clinics are apparently on the up and up, some have been cited by government agen cim or criticised by Better Busines Bureaus and nonprofit credit counse lors for promising more than they can, or will, deliver. According to their critics, such clinica, also known as credit-repair companies. often Lamply that they correct anycos's poor credit record, whether or not the information in it is accurate.

cannot

"Accurate Information magically be erased from a credit re port for any among of money." Bar. bars Berger Opatowsky, president of the Berter Businem Bureau of Metro politan New York, said.

The mounting criticism over creatit clinics led to the passage this year of a new law in California-the first of its kind in the nation to regulato their advertising and business prac tica. Passage of the bill fallowed complaints that many clinics falsely ed individuals to believe they could obtain credit by upgrading their credit file.

Vartery of Services

Credit clinics generally describe their function as that of belping the public remove erroneous, outdated or incomplete data from credit bureau files. Among their services are identi fying the credit bureaus that may have an individual's credit file, assisting an individual in obtaining thane fles and preparing correspondenss and forms to dispute informa Hon listed thers.

Their role, they say, is ementially one of assisting consumers in protect. ing and exercising what are their legal rights. Under a provision of the Fair Credit Reparting Act, individu als who have been denied credit are allowed to question the accuracy of Any item in their credit berean file. For a modent fan- or no charge if credit has recently been denied some

- credit bureau itself will uns ally provide a person a copy of his or her credit record.

What the credit clinics do, thers fore, is offer a service for a fee that is beaucaily be different from what com

"Compaers are often wa that they may request copies of their

dit sports and dispute any LLams in them, without the aid of a compe ay." the president of the New York Berter Bustos Bureau anid.

Ronald A. Stewart, praside of Financial Planning Asociacas, a New York clinic, said, however, that when it as to credit burns,

ple got very confused." Want it comes down to, he said, is the ques an "Do you want to call an expert

How to Check Credit File

Any Individual can investigate the contents of his or her credit file by directly contacting one or more of the approximately 2,000 credit consumer bureaus, or credit clearinghouses. the United States. The nearest ones can be found by calling a local Better Business Burge of by looking in the telephone Yellow Pages under "Credit Rating or Reporting Agencies."

Although the Fair Credit Reporting Act requires that a bureau Eve person no more than an oral or written credit history review, many burents will go be yand the technical requirements of the law and furnish the same computer-generated compilation of facts that they give the banks, .retailers and other companies that subscribe to their service. An Ladividual who has been denied credit on the basis of negative in

anced person to do something, or do you want to do it yourself?"

Adolph Fleisher, a hand-raiser in North Hollywood, Calif., was satis fled with results achieved by the clinic be employed when he discov. erad inaccurate information in his file. It took the clinic almost twe years to achieve the results, and it cost Mr. Fleisher $350, but in the end the erroneous material was removed from his credit record.

"They know the system and they understand the workings of these re tail credit companies," he said. "They engage in the letter-writing and the contacts, which is difficult for the average person. I don't think i would have bass able to get it straightened out without them."

Catherine Brockier, however, had a different experience. A New York resident, Miss Brocknunier was overdue as sure of burile not win long age and, after finally catching up on bar payments, she contacted a local credit clinic to make stre record showed she had met her obugations. But she said to a telephone interview and ir a letter to a loca credit bureau that after paying the Arst 350 on a 3630 charge by the clinic for its services, no changes were made in her record and the clinic comtheased to dun bar for the remainder of its fan

Increasingly, as credit clinics have expanded from their origins in Callfornia to other states, they have come under criticism from dissatisfied cus Lomers and from other quarters-in

formation from a credit bureau can obtain this review without charge within 30 days of the denial. Otherwise, the fee typically ranges from $8 to $12 for such a credit check.

After inspecting this record of

credit behavior, a consumer can question any item believed to be inaccurate, misleading or vague. The credit bureau must then investigate and remove any item that cannot be substantiated.

When a bureau affirms, rather than removes, questionable item, an individual can present a 100-word explanation that must be placed in his or her file. And whenever an adverse item is deleted from a file or an explana tory statement is added to one, a consumer may request that the credit bureau inform every credit grantor who received a report within the last six months.

cluding, not surprisingly, from the credit bureaus they are monitoring.

"Their appeal is directed to the consumer who has been denied credit because of a poor credit record," said Walter R. Kurth, president of Associ ated Credit Bureaus, the national trade association for the bureaus. "The objective is to overwhelm the established system."

Under the Fair Credit Reporting Act, a credit bureau must investigate a disputed record "unless there is reasonable grounds" to believe a re quest is frivolous or irrelevant." One complaint involves clinics that have been known to advise customers to dispute almost everything in a file. forcing the credit bureau to request verification of this data from the vari ous credit grantors.

erally

The bureaus arequired to compiete the verification process "within reasonable Uy." which has gon bess considered to be 30 days. or also the date must be removed from the consumer's record. If both bureaus and greators are swamped with such requests from men and women with bad credit records, the established system could become jammed and a plethora of consumer Information would have to be re moved from credit bureau files.

Larry Smith, executive vice president of the Con Corporation, which owns many credit bureaus. said of the credit clinics: "I think they are a business that is a business. There are cases where they pray upon people's lack of knowledge."

Ann Fortney, associate director for ervallt practice at the Federal Trade Commission smiri: "We have run chalal that when a cralit-repai clinic makes the representation that It can remove all negative information, even when accurate, that's a false representation. There have been misrepresentations, and we have investigated some companies." 10 Cliales Cited

The New York Better Business Bu. reau recently cited 10 credit clinics: the greater New York City area for such activities as making misleading or potentially misleading statements making unsubstantiated claims and failing to disclose limitations on of fers. For example, the Correct Credit Company of Howell, N.J., the clinic with which Miss Brockunier dealt. was charged with, among other things, failing to substantiate its claim that "we can correct your bac credit rating."

A message left for comment from Pat Pasano, president of Correc Credit, was not returned. Attempts c contact the other companies on the Better Business Bureau list yielded no answers when telephoned, or a recording that a phone number had been disconnected. no phone num ber at all for an address given.

"I hear stories every day where people are being told their credit re ports can be repaired to get bankrupt. cles, judgments and all other nega. Live things taken off their credit re port," said Luther R. Gatling, presi dent of Budget and Credit Counseling Services, the New York affiliate of the National Foundation for Consumer Credit. "I'd like to see those fellows blown out of the water."

Three years ago, the National As sociation of Credit Counselors was es. tablished in Los Angeles to help improve the image of the credit clinic industry. The founder and president of the association is Daniel A. Kasth. who is also president of Teltrans Credit, a clinic in Los Angeles.

Last year the state of California brought a civil suit against both the company and Mr. Kasth. charging violations of the Business and froles. sions Code and acts of unfair compet tion. The suit contends that Teltrans "through their advertising and sales presentation, lead prospective buyers

to believe that defendants can cure their credit problems, clear up ther credit history and enable them to ob tain credit they would not otherwise be able to get."

Susan E Heartchsen, a stale Deputy Attorney General, noted that the court ordered a default against Mr. Kosth because he did not respond to requests to produce certain documents. But Mr. Kasth said. "We have stopped using that type of advertis ing

....

YOUR
MONEY

MATTERS

By KATHLEEN A. HUGHES Staff Reporter of THE WALL STREET JOURNAL

"Is bad credit ruining your life? We erase black marks....

"Now get major credit cards easy!" "Bankruptcy no problem!"

Such are the claims of hundreds of "credit clinics" that have sprung up around the country. The companies say they can clean up an individual's credit history and help the desperate obtain credit cards.

But while some are legitimate, others have drawn fire from law-enforcement agencies for allegedly false or misleading advertising. "Some operate for quite some time in a fraudulent manner collecting money with false promises." says Leonard Schapira, a consultant at the Better Busi. ness Bureau in Los Angeles.

Daniel Kosth, president of the National Association of Credit Counselors, which claims more than 500 credit-repair compa. nies as members, concedes that "there have been some problems in advertising techniques. But he says the companies do help people clear up credit reports and get credit cards.

California Law Suit

The state of California has filed a civil suit seeking to enjoin Mr. Kosth and Teltrans Credit, a Los Angeles-based creditrepair company he founded. from using misleading advertising. Mr. Kosth says the company has changed its advertising, but he terms the suit "bogus" and denies any wrongdoing.

Credit clinics operate in a variety of ways. In the case of credit reports, most take advantage of a federal law that gives consumers the night to challenge the accuracy of information kept on file by creditreporting agencies. Negative information. such as failure to pay a bill or paying late. often makes it difficult to get a mortgage or any type of consumer loan.

Under the law, all consumers have a right to find out what is in reports on themselves. Reports must be provided free of charge to people who have been denied credit based on information in them. In other cases. credit-reporting companies charge fees ranging from $8 to $20. If a customer requests verification of the information, the agency generally must confirm it and respond within a "reasonable" time-usually 30 days-or erase the information.

The clinics' critics argue that con sumers can check their credit records on their own for a lot less money than the

clinics charge. And some industry execu tives agree, at least in part.

"We don't do anything that consumers with chutzpah couldn't do on their own." says Enc Phillips, the vice president of operations al Amencan Credit Clearing Inc. in Los Angeles, which charges a minimum fee of $225. But he adds that some people simply don't want to bother with the proce dure of challenging the information.

Law-enforcement officials say their big. gest concern is that many of the companics advertisements either imply or guar antee that all negative information can be wiped off a credit report. That just isn't true as an unqualified promise." says Susan Henrichsen, a deputy attorney general in San Diego.

The credit-repair companies do have

A CLAM that all

negative information

can be wiped off a credit report 'just isn't true as an unqualified promise,' says a law-enforcement official.

ways to remove some negative informa tion, however. A tactic used by some of them is inundating credit agencies with requests that they verify information in consumers files. A customer s creditors often don t respond in time, and the information is erased.

They dispute everything in the file and hope that someone drops the ball. savs Diane Terry a manager at Trans Union Credit Information Co. Fullerton. Calif. one of the largest credit-reporting compa.

nies.

Mr. Phillips of American Credit Clear ing says that 50% to 60% of the time the creditor doesn't respond, and the information is removed. But credit agencies are fighting back with stepped-up efforts to venty information quickly. Appealing to Creditors

So some clinics now appeal directly to a customer's creditors to remove negative entries in exchange for payment of outstanding debts. Mr. Kosth says many ma jor creditors agree.

This irks credit agencies. It's unethi cal for creditors to remove accurate infor mation on the reports. says Marvin Ka plan, spokesman for Associated Credit Bu reaus in Houston, which represents about 1.400 credit agencies. The credit clinics are a threat to the entire credit-reporting system. he adds.

Many credit clinics also claim to help people get credit cards. According to a re

port by the Better Business Bureau Angeles, however, most of their advertise ments don't indicate that an individual ! ten must deposit money in an out-of-state savings and loan to get a 'secured The deposit, usually $300. becomes maximum credit line.

Most financial institutions don't offe secured credit cards, because the le deliquent payments is usually higher than for unsecured cards. Even those issuing se cured cards often require customers meet minimum credit standards.

Mr. Kosth of the National Association of Credit Counselors says he knows of at least six lenders that will offer a secured care anyone. He says some credit clinics senc people credit-card applications from 1g gressive lenders that use rock-bottom en ing standards and don't require deposits Information Requirements

In an effort to crack down on claims. California passed a law fast ye requiring the credit services to provide more information to customers. The also requires the companies to post a conc to protect consumers with legitimate com plaints. Pennsylvania and Utan have taken steps.

Still, the California law hasn anywhere close to eliminating the lem, says Ms. Henrichsen of the state :: torney general's office. People set bitsiness using fictitious names. more aw and by the time we find out to them, they ve closed down sne says Ms. Hennensen says the ice s number of credit repair compactIOS o enjoin them from sing misie advertising, and she expects more sulla beled this year.

ng

In one of the suits. the office that Service One International Car Angeles made inisleading statements indicating that it could obtain Visa. Mas terCard and other credit cards for who bought its services. The suit, flec state court in Los Angeles. says company often failed to obtain the and didnt disclose that a customer nac open a savings account to get the card The suit also says the company offer to refund a customer's fee in full within days if the card didn't arrive in the pr ised time. But customers haven received the refunds or haven't got them within the promised time, the suit maintains.

A lawyer for the company, which us changed its name to Service One Corp., nies the allegations. The company "as intentionally misrepresented what t do. he says, and if some people were misled. the company has taken steps to e (und their noney He adds that there may be instances where credit wasn't obtained due to the conduct line applicant