Hull, Steven M

Text (OCR of the scan at left; may contain errors)

IN THE MATTER OF STEVEN M. HULL CONSENT ORDER IN REGARD TO ALLEGED VIOLATION OF SEC. 5 OF THE FEDERAL TRADE COMMISSION ACT Docket C-3189. Complaint, May 27, 1986-Deci.ion, May 27, 1986 This consent order prohibits, among other things, a former offcial of Credit Establishing Bureau, a Detroit-based credit repair clinic that went out of business in February, 1984, from falsely representing in the future that he can improve credit records and arrange for consumers to receive major credit cards. Additionally, respondent, as a company founder, is required to provide consumer redress in the form of a six-week consumer education program directed at people with credit problems similar to those of the company s clients. Appearances For the Commission: Kathleen V. Buffon. For the respondent: Bruce Genderson, Williams Connally, Washington' D.

COMPLAINT The Federal Trade Commission, having reason to believe that Steven M. Hull, individually and as a former partner trading and doing business as Credit Establishing Bureau, formerly a partnership, ("respondent") has violated the provisions of the Federal Trade Commission Act, and it appearing to the Commission that a proceeding by it in respect thereof would be in the public interest, alleges: PARAGRAPH 1. Steven M. Hull is a former partner of Credit Establishing Bureau ("CEB"). formerly a partnership, with its offce and principal place of business located at 17344 W. 12 Mile Road, Suite 103, Southfield, Michigan. Steven M. Hull, together with others, formulated, directed and controlled the acts and practices of said business, including the acts and practices alleged in this complaint. His address is 2015 North Bush Street, Apt. 108, Santa Ana, California. PAR. 2. For purposes of this complaint, the following definitions shall apply:

A. Credit Profile means any written, oral or other communication of information by a consumer reporting agency bearing on a person creditworthiness, credit standing, credit capacity, character, general reputation, personal characteristics or mode of living that is used or Complaint 107 F.

expected to be used or collected in wbole or in part for the purpose of establishing the person s eligibility for credit; B. Credit Improvement Service(s) means any service to improve a person s credit profie by removing negative information appearing therein, changing the rating of such information from negative to positive, or otherwise enhancing said credit profie in return for the payment of money; and C. Credit Card Procurement Service(s) means any service to obtain a credit card on behalf of a person in return for the payment of money. PAR. 3. CEB has engaged in the advertising, solicitation, offering for sale and sale of credit improvement services and credit card procurement services to the public by means of newspaper, radio and television advertisements, by direct personal contact with prospective clients, and through letters, contracts and other documents. PAR. 4. The acts and practices ofCEB alleged in this complaint have been in or affecting commerce.

PAR. 5. In the course and conduct of its business, CEB has made numerous statements in advertisements, contracts and other written documents, examples of which are attached hereto as Exhibits 1 through 4.* and has made numerous oral statements to prospective clients through employees and sales agents for the purpose of inducing the purchase of its credit improvement service. PAR. 6. Typical ofCEB' s statements referred to in Paragraph Five but not necessarily inclusive thereof, are the following: A. Television and radio advertisements:

1. Credit problems? No problem! Stop being rejected time and again. 2. If you have no credit, bad credit or if you have declared bankruptcy, Credit Establishing Bureau in Southfield can help. Their friendly, qualified counselors . . . . can challenge negative entries on your credit profie and improve your credit rating.

B. Contracts:

1. Credit Establishing Bureau shall assist in obtaining a credit profie. . . . 2. Credit Establishing Bureau will dispute all negative entries on client's credit profile. . . .

3. Work to be conducted by Credit Establishing Bureau is under the Federal Fair Credit Reporting Act.

4. Credit Establishing Bureau agrees to improve client's profie, or money back Guaranteed.

C. Oral statements to the effect that:

1. CEB can remove bankruptcies, judgments, and other negative . See pages 412-45. Identical exhibits were used inJuhn C. Andersun Dkt. C-llb5. 477 Complaint information from clients' credit profies and has done so frequently in the past.

2. Removal of bankruptcies from credit profies is CEB's specialty. 3. Many people who have had bad credit profies now have Aratings and are able to obtain credit because of CEB's services. 4. After CEB disputes negative information in a client's credit profie, the credit bureau wil remove the information or improve its rating in order to meet the requirements ofthe Fair Credit Reporting Act.

PAR. 7. Through the use of the statements referred to in Paragraph Six, and other statements not specifically set forth herein, CEB has made the following material representations, directly or by implication:

A. CEB sought and obtained credit profies and performed credit improvement services on behalf of all clients. B. The Fair Credit Reporting Act enabled CEB to remove adverse information appearing in clients' credit profies or to improve the rating of such information regardless of its accuracy or date. C. Through its credit improvement services, CEB improved the credit profies of many clients with bad credit histories regardless of the accuracy or date of the information appearing in the credit profies.

D. CEB provided refunds to all clients whose credit profies were not improved by its credit improvement services. PAR. 8. In truth and in fact:

A. CEB did not seek and obtain credit profies and did not perform credit improvement services on behalf of all clients. B. The Fair Credit Reporting Act, 15 V. C. 1681 et seq. which regulates the information that may be reported in a person s credit profie, did not enable CEB to remove adverse information appearing in clients' credit profies or to improve the rating of such information regardless of its accuracy or date.

C. Through its credit improvement services, CEB did not improve the credit profies of many clients with bad credit histories regardless of the accuracy or date of the information appearing in the credit profies.

D. CEB did not provide refunds to all clients whose credit profies were not improved by their credit improvement services. Therefore, the representations set forth in Paragraph Seven were and are false and misleading.

PAR. 9. In the course and conduct of its business, CEB has made numerous statements in advertisements, contracts, and other written documents, examples of which are attached hereto as Exhibits 1 Complaint 107 F.

through 4, and has made numerous oral statements to prospective clients through employees and sales agents for the purpose of inducing the purchase of its credit card procurement service. PAR. 10. Typical ofCEB' s statements referred to in Paragraph Nine but not necessarily inclusive thereof, are the following: A. Advertisements:

If you have no credit, bad credit or if you have declared bankruptcy, Credit Establishing Bureau in Southfield can help! Their friendly, qualified counselors can get you Master & Visa credit cards.

B. Con tracts:

Credit Establishing Bureau guarantees that the heresaid client wil obtain a Mastercard or Visa credit card or 80% of your total fee wil be refunded. C. Oral statements to the effect that:

1. CEB works in conjunction with a local bank. An agent ofCEB wil go to the bank on the client's behalf and submit a credit card application. CEB will represent its client to the bank as a creditworthy individual. With CEB's backing, the client has a much better chance of obtaining a credit card.

2. Because of the prospective client's circumstances (e. employment, age, length of time in area), CEB wil be able to obtain a credit card for him or her on an unsecured basis through a local bank. 3. CEB wil refund the fee if it is unable to obtain a credit card on an unsecured basis through a local bank.

PAR. 11. Through the use ofthe statements referred to in Paragraph Ten, and other statements not specifically set forth herein, CEB has made the following material representations, directly or by implication:

A. CEB regularly obtained Master or Visa credit cards on an unsecured basis for its clients regardless of clients' prior credit histories. B. CEB had an established connection with a local bank through which it regularly arranged for the issuance of credit cards on an unsecured basis.

C. CEB performed services for all clients that contributed substantially to its clients' ability to obtain a credit card. D. There was good reason to believe that CEB' s clients would obtain a credit card through its services.

E. CEB provided refunds to clients who did not obtain a credit card through its services.

PAR. 12. In truth and in fact;

477 Decision and Order A. CEB did not regularly obtain Master or Visa credit cards on an unsecured basis for their clients regardless of clients' prior credit histories.

B. CEB did not have an established connection with a local bank through which it regularly arranged for the issuance of credit cards on an unsecured basis.

C. CEB did not perform services for all clients that contributed substantially to its clients' ability to obtain a credit card. D. There was not good reason to believe that CEB's clients would obtain a credit card through its services. E. CEB, in many instances, did not provide refunds to clients who did not obtain a credit card through its services. Therefore, the representations set forth in Paragraph Eleven were and are false and misleading.

PAR. 13. CEB' s aforesaid false and misleading representations have induced persons to pay over to it substantial sums of money for services that CEB could not or did not perform as represented. CEB has received said sums of money and, in a substantial number of instances, has failed or refused to refund such money to such persons. Therefore, the continued retention of said money constitutes an Unfair act or practice.

PAR. 14. The acts and practices ofCEB as alleged in this complaint constituted and now constitute unfair or deceptive acts or practices in or affecting commerce in violation of Section 5 ofthe Federal Trade Commission Act.

DECISION AND ORDER The Federal Trade Commission having initiated an investigation of certain acts and practices of the respondent named in the caption hereof, and the respondent having been furnished thereafter with a copy of a draft of complaint which the Bureau of Consumer Protection proposed to present to the Commission for its consideration and which, ifissued by the Commission, would charge the respondent with violation of the Federal Trade Commission Act; and The respondent and counsel for the Commission having thereafter executed an agreement containing a consent order, an admission by the respondent of all the jurisdictional facts set forth in the aforesaid draft of complaint, a statement that the signing of said agreement is for settlement purposes only and does not constitute an admission by respondent that the law has been violated as alleged in such complaint, and waivers and other provisions as required by the Commission s Rules; and The Commission having thereafter considered the matter and hav- Decision and Order 107 F. ing determined that it had reason to believe that the respondent has violated the said Act, and that complaint should issue stating its charges in that respect, and having thereupon accepted the executed consent agreement and placed such agreement on the public record for a period of sixty (60) days, and having duly considered the comments fied thereafter by interested persons pursuant to Section 2. of its Rules, now in further conformity with the procedure prescribed in Section 2.34 of its Rules, the Commission hereby issues its complaint, makes the following jurisdictional findings and enters the following order:

1. Proposed respondent Steven M. Hull is a former partner of Credit Establishing Bureau, formerly a partnership, with its offce and principal place of business located at 17344 W. 12 Mile Road, Suite 103, Southfield, Michigan. Steven M. Hull, together with others, formulat- , directed and controlled the acts and practices of said business. His address is 2015 North Bush Street, Apt. 108, Santa Ana, California. 2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondent, and the proceeding is in the public interest.

ORDER For purposes of this order, the following definitions shall apply: A. Credit Profile means any written, oral or other communication ofinformation by a consumer reporting agency bearing on a person creditworthiness, credit standing, credit capacity, character, general reputation, personal characteristics or mode of living that is used or expected to be used or collected in whole or in part for the purpose of establishing the person s eligibility for credit; B. Credit Improvement Service(s) means any service to improve a person s credit profie by removing negative information appearing in a credit profie, changing the rating of such information from negative to positive, or otherwise enhancing said credit profie in return for the payment of money; and C. Credit Card Procurement Service(s) means any service to obtain a credit card on behalf of any person in return for the payment of money.

It is ordered That respondent Steven M. Hull, individually and as a former partner of Credit Establishing Bureau, formerly a partnership, his successors and assigns, and his offcers, agents, representa- 477 Decision and Order tives and employees, directly or through any corporate or other device, in connection with the advertising, solicitation, offering for sale, sale or performance of any credit improvement service in or affecting commerce, as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from: A. Misrepresenting, directly or by implication: 1. That they wil seek or obtain any credit profie or wil perform any credit improvement service for any person; 2. Any right or remedy available under the Fair Credit Reporting Act, 15 V. C. 1681 et seq. including the ability to remove adverse information in any credit profie or to change any rating of such information from negative to positive;

3. That they can or wil improve the credit profie of any person regardless ofthe accuracy or date ofthe information appearing in the credit profie; or 4. That they wil refund in whole or in part any fee paid by any person and the conditions upon which they wil do so. B. Offering to any person, directly or by implication, any moneyback or satisfaction guarantee unless with each such offer the identity ofthe guarantor and all the terms and conditions ofthe guarantee are clearly and prominently disclosed and unless they promptly and fully honor each such guarantee offered.

C. Participating in any dispute or encouraging any person to engage in any dispute with any consumer reporting agency, pursuant to procedures authorized by Section 611 of the Fair Credit Reporting Act, 15 V.s.C. 168li, over the accuracy or completeness of any item of information in any credit profie when they know or have reason to know, from information provided by the client or otherwise, that the item of information in the credit profie is accurate and complete. II.

It is further ordered That respondent Steven M. Hull, his successors and assigns, and his offcers, agents, representatives and employees, directly or through any corporate or other device, in connection with the advertising, solicitation, offering for sale, sale or performance of any credit card procurement service in or affecting commerce, as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from: A. Misrepresenting, directly or by implication: 1. That they can or wil obtain a credit card or other extension of credit on an unsecured or any other basis; Decision and Order 107 F. 2. That they have any connection with any bank, credit card issuer or any other entity through which they can or will arrange for the issuance of credit cards or for the extension of credit; 3. That they can or will perform services for any person that will contribute in any way to that person s ability to obtain a credit card; 4. The likelihood of any person s obtaining a credit card through their services; or 5. That they will refund in whole or in part any fee paid by any person and the conditions upon which they will do so. B. Offering to any person, directly or by implication, any moneyback or satisfaction guarantee unless with each such offer the identity ofthe guarantor and all the terms and conditions ofthe guarantee are clearly and prominently disclosed and unless they promptly and fully honor each such guarantee offered.

It is further ordered That respondent Steven M. Hull shall conduct the following public information program over radio station W JZZ- 106 FM, Detroit, Michigan, and in the Detroit Free Press, Detroit Michigan, to inform consumers of misrepresentations that may have been made in connection with the sale of credit improvement services and credit card procurement services: respondent shall purchase from said radio station advertising time for a sixty (60) second radio announcement to be broadcast every Friday after 8:00 P. , every Saturday between 8:00 A.M. and 8:00 P. , every Saturday after 8:00 P. and every Sunday between 10:00 A.M. and 8:00 P. , for a continuous six (6) week period to be designated by the Federal Trade Commission. The text ofthe announcements to be broadcast is attached hereto as Appendix A and Appendix B. Appendix A shall be broadcast on Friday and on Saturday and Appendix B shall be broadcast on Saturday and on Sunday throughout the six (6) week broadcast period. All tapes prepared for use in connection with such announcements must be approved by the Federal Trade Commission prior to their initial broadcast. No modification of the text of the announcements may be made without the prior written consent of the Federal Trade Commission. Respondent shall pay all fees involved in the production and broadcast of the announcements.

Respondent shall also purchase from said newspaper advertising space for one (1) seven (7) line announcement to be published Friday, Saturday, and Sunday in the classified section of said newspaper under the heading "Financial Offers and Money to Loan " for a continuous six (6) week period to be designated by the Federal Trade Commission. The text of the announcement to be published is at- 477 Decision and Order tached hereto as Appendix C. No modification of the text of the announcement may be made without the prior written consent of the Federal Trade Commission. Respondent shall pay all fees involved in the production and publication of the announcement. IV.

It is further ordered That respondent Steven M. Hull shall maintain for at least three (3) years and, upon request, make available to the Federal Trade Commission for inspection and copying: A. All records and documents necessary to demonstrate fully his compliance with Part II of this order, including but not limited to: 1. Copies of all contracts entered into for the production and broadcast of the announcements;

2. Copies and records of all communications concerning the text of the announcements and the dates and times that the announcements are to be broadcast; and 3. Evidence of payment for the production and broadcast of the announcements.

B. All records and documents relating to any credit improvement service or credit card procurement service that he offers to any person, including but not limited to:

1. Copies of any advertising and promotional material disseminated to any person;

2. Copies of any contracts, disclosure statements or other documents furnished to any person;

3. Copies of any material offering, directly or by implication, any money-back or satisfaction guarantee in connection with the purchase of such services;

4. Copies of any request for a refund from any person, any correspondence or other records relating to such request, and documentation suffcient to show the date, manner, amount, and recipient of any refund made; and 5. Copies of documents and records suffcient to show that, in the ordinary course of business, respondent performs the services that he represents, directly or by implication, that he can or will perform. It is further ordered That respondent Steven M. Hull and his successors and assigns distribute a copy of this order to any present or future offcers, agents, representatives and employees having ad- Decision and Order 107 F. vertising, sales, or managerial responsibilities with respect to the subject matter of this order and that respondent and his successors and assigns secure from each such person a signed statement acknowledging receipt of said order.

VI.

It is further ordered, That respondent Steven M. Hull promptly notify the Federal Trade Commission of the discontinuance of his present business or employment and of his affliation with any new business or employment whose activities include credit improvement services or credit card procurement services. Such notice shall include the respondent's new business address and a statement of the nature of the business or employment in which the respondent is newly engaged as well as a description of respondent's duties and responsibilities in connection with the business or employment. VII.

It is further ordered That respondent shall, within sixty (60) days after the date of service upon him of this order, fie with the Commission a report, in writing, setting forth in detail the manner and form in which he has complied with this order, and that respondent shall fie such supplemental reports as the Commission subsequently requests.

Commissioner Strenio did not participate.

APPENDIX A The following is a public service message for consumers. Have you been turned down for credit because oflate payments, court judgments, or bankruptcy on your credit bureau report? 11'80, you should learn what your rights are under federal law.

Under the Fair Credit Reporting Act, you have the right to learn what is in your credit bureau report. And you have the right to challenge any information that is not complete and accurate. But if the information is accurate no one can require the credit bureau to remove it-unless it is out-dated. The law permits a history oflate payments to be reported for 7 years. And bankruptcy may be reported for 10 years. So don t be misled by ads promising to "clean up" your credit history. Learn what the law allows. For free information about your credit rights, write to: Credit Tips Federal Trade Commission, Washington, D. , 20580. The address again is Credit Tips Federal Trade Commission, Washington, D. , 20580. 477 Decision and Order APPENDIX B The following is a public service message for consumers. Have you been turned down for credit because you ve never had credit before? If so, you know that a good credit history is important. Ads offering "instant credit" or major credit cards regardless of your past credit history may be misleading. Most creditors want to know your credit history before giving you credit. That' s why most creditors contact a credit bureau when you apply for credit-they want to learn what your past payment history has been. If the credit bureau has little or no information about you, the creditor may reject your application. To learn what's in your credit file, check with the credit bureaus in your area. You have the right to do this under the Fair Credit Reporting Act, a federal law. For free information about your credit rights and tips on how to build a better credit history, write to: Credit Tips, Federal Trade Commission, Wa."Ihington, D.C., 20580. The address again is Credit Tips, Federal Trade Commission, Washington, D. , 20580. APPENDIX C BAD CREDIT? NO CREDIT' For free information on credit laws and consumer problems write Credit Tips, Federal Trade Commission, Washington, nc. 20580 Complaint 107 F.