DENVER (Legal Newsline) - Colorado Attorney General John Suthers has filed a lawsuit against a Denver-based credit repair company.

The complaint, which names Veracity Credit Consultants, was filed in Denver County District Court. Veracity is alleged to have charged upfront fees for its services, which is illegal under state and federal law.

Veracity, the complaint alleges, required an initial setup fee from consumers of as much as $99 as well as monthly fees of up to $79. A credit repair firm, under Colorado law, may only charge consumers fees after its services are complete. The company is also alleged to have failed to disclose to consumers the total amount they would be charged for its credit repair services.

The lawsuit also alleges that Veracity advertised that it would "optimize" the credit records of consumers by repairing or erasing bad credit. Under the federal Fair Credit Reporting Act and Colorado Consumer Credit Reporting Act, negative information about a consumer's credit may be reported by credit bureaus for seven years and information concerning bankruptcies for 10 years.

The Colorado Credit Services Organization Act and similar other federal laws, Suthers said, prohibit untrue or misleading statements and representations as well as advance fees for services. They also require disclosure of the total amount a consumer will pay for credit repair services and disclosure about when accurate information can be removed from credit reports.

The laws also require disclosure of a consumer's right to correct inaccurate information and provide a five day right to consumers to cancel a credit repair contract.

"Consumers trying to work their way out of debt and improve their credit should carefully examine the promises any credit repair company makes," Suthers said Monday.

"Consumers also should beware of any company that charges upfront fees for any credit repair services. Upfront fees are prohibited under Colorado and federal law."

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