You read it here first: FTC Cracks Down on Criminal Credit Repair Scams In “Credit repair scams remain alive and well” (Commercial Law Bulletin, May/June 1998), we told you about scam artists who sell instructions for consumers to repair their credit that in most cases don’t work and that typically involve fraud. Recently, the Federal Trade Commission began a massive crackdown on operators who turn creditchallenged consumers into lawbreakers.

Using the Internet and other media to make claims such as “Brand-new credit file in 30 days,” the suspect firms sell instructions about how consumers can substitute federallyissued, nine-digit employee identification numbers or taxpayer identification numbers for Social Security numbers and use them illegally to build new credit profiles that will allow them to get credit they may be denied based on their real credit histories. Ads for this information frequently claim that the practice, known as file segregation, is legal. However, using a false identification number to apply for credit is a felony “These scams target very vulnerable consumers,” said Jodie Bernstein, director of the FTC’s Bureau of Consumer Protection. “They prey on people who are plagued by poor credit people who may be desperate enough to develop a clean credit history so they can get a loan, get a job, or buy a car. File segregation scammers . . . lie to consumers, take their money and turn them into lawbreakers.”

“This type of crime creates several victims,” explained Drew Edmondson, Oklahoma Attorney General, who serves as chairman of the National Association of Attorneys General (NAAG) Consumer Protection Committee. “The unsuspecting consumers who only want to repair their credit are victimized, as are the businesses who grant credit based on falsified information and then are forced to increase prices. We as consumers must pay the higher prices to make up for their losses.”

The FTC said that 17 law enforcement agencies have filed 43 law enforcement actions against defendants who claim to help consumers obtain new credit histories through fraudulent means.

Copyright Commercial Law League of America Mar/Apr 1999

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