Attorney General Lockyer Announces $150,000-Plus Consumer Protection Settlement with Credit Repair Company

MyPerfectCredit Will Pay Restitution to Customers and $150,000 in Civil Penalties

Wednesday, February 1, 2006
Contact: (916) 210-6000,

(SAN DIEGO) – Attorney General Bill Lockyer today announced MyPerfectCredit (MPC) will pay $150,000 in civil penalties and provide restitution to consumers to resolve allegations that the credit repair company engaged in false advertising and unfair business practices.

“MyPerfectCredit deceived customers by falsely telling them the company did not have to comply with laws that protect consumers of credit repair services, and then routinely violated those laws,” said Lockyer. “This settlement will penalize the violations, compensate victims and ensure MyPerfectCredit obeys the law in the future.”

Lockyer today filed the settlement, and a lawsuit the settlement resolves, in San Diego County Superior Court. The court quickly entered a judgment approving the settlement. Aside from MPC, other defendants covered by the lawsuit and settlement include PathwayData, Inc., which does business under the MPC name, and Pathway owner David Coulter.

The settlement requires the defendants to provide restitution to customers who have filed complaints against MPC, and any consumer who files a complaint against the company within 90 days from today. To date, more than 300 consumers in California and other states have filed complaints against MPC. Additionally, aside from the $150,000 in civil penalties, the defendants will pay $6,000 to cover the state’s costs of investigating the case.

MPC operated an online credit repair service. A California law called the Credit Services Act (Act) required MPC to register with the Attorney General’s Office before providing credit repair services to consumers. MPC violated the Act, the complaint alleges, by operating its business from December 2003 to December 2005 without registering with Lockyer’s office. Then, in marketing its credit repair services, MPC falsely told the public it did not have to comply with the Act, according to the complaint.

MPC advertised on the Internet that it could help consumers correct alleged errors on their credit reports. The company told consumers who responded to the ads that MPC would obtain their credit reports from the three major reporting agencies, then forward them electronically to the consumers. Consumers then would have a limited time to determine which negative information on the report they wanted MPC to challenge with the credit reporting agencies.

If consumers did not specify within five days which information should be disputed, MPC frequently challenged all negative information on credit reports, then charged consumers a fee for each challenge on each report, the complaint alleges. MPC charged either $4.95 or $6.95 per challenge. This practice violated a provision of the Act that prohibits credit repair companies from challenging information on credit reports without consumers’ knowledge, the complaint alleges.

MPC also violated the Act’s requirements that credit repair companies provide consumers certain disclosures and written contracts with specific provisions to protect customers.

Additionally, according to the complaint, MPC purchased a portfolio of customers from ClearCredit, a credit repair firm that Lockyer successfully sued in 2003 for violating the Act. Via email, MPC informed ClearCredit customers they automatically would be transferred to MPC’s program unless they opted out within a few days. ClearCredit customers who did not respond were automatically transferred to MPC’s program and charged a monthly fee, even though MPC did not verify the ClearCredit customers had received the email notification. If ClearCredit customers did not pay the monthly fee, MPC employed collection agencies to get the money.

The settlement prohibits MPC from further violating the Act, as alleged in the complaint.

Consumers who wish to file complaints against MPC to become eligible to receive restitution should send their complaints to: Gayle Weller, Consumer Protection Assistant, Office of the Attorney General, 110 West A Street, Suite 1100, San Diego, CA 92101. Complaints should include substantiation for any restitution the consumer seeks.

The MPC case is the fifth brought by Lockyer in the last three years against credit repair and debt management operations. Prior successful lawsuits, in addition to the ClearCredit case, included actions against Housing Assistance Services, Inc., Briggs & Baker, and Integrated Credit Solutions, Inc. and Lighthouse Credit Foundation.

Lockyer warned consumers to be wary of businesses which boast they can repair credit. “If negative information on a credit report is current and accurate, it cannot be removed regardless of how many disputes a credit repair business lodges,” he said.

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