FTC Shuts Down Credit Repair Using Tradelines, Piggybacking, and Identity Theft Reports

I see, Road, you’re get out of debt guy. If you’re listening to this podcast, you probably want to learn more about money, credit, and debt. Or, you’re one of the many good people out there with bad debt and you want it to go away. But stick with me, together we can make that happen. Either way, I’m here for you and I believe a better and more financially successful future is ahead. It can be within your grasp. I’d like to ask you for a favor. If you find this or any of my podcasts helpful, please take a moment and leave a review on the podcast platform you’re listening on. Your feedback and opinion matter to me. And if I’ve done a good job, your review helps others to find the podcast as well. And while you’re there leaving your review, don’t forget to subscribe to the show so that you can be notified when the next episode comes out. Last piece of housekeeping. If you have a question or comment you’d like to hear on an upcoming podcast, you can leave me a voice message at getoutofdebt.org slash message. Or leave me a question for me to answer on my website by going to getoutofdebt.org slash question. Thank you so much for being a great listener and I’m sending you a giant virtual hug in return. And now on with the podcast. I said Steve Rhode, you’re getoutofdebtguy. I wanted to share with you the story that I thought was most important that I posted today. And this one is all about the Federal Trade Commission shutting down a credit repair outfit. The Federal Trade Commission said the company illegally charged consumers for credit advice, filed false ID theft reports and pitched them on fake business opportunities. At the request of the Federal Trade Commission, a federal court has temporarily halted a bogus credit repair scheme known as the credit game for promoting a series of lies and deception. The FTC alleged the schemes operators lied to credit reporting agencies regarding information on consumers credit reports and pitched consumers a supposed business opportunity that was essentially starting their own bogus credit repair scheme. Quot credit repair schemes cheat those already in financial trouble and these defendants even tried to redirect COVID-19 tax benefits into their own pockets. Unquote said Samuel Levine, director of the Federal Trade Commission’s Bureau of Consumer Protection. Quot were grateful that the court shut this scheme down and disrupted this web of deception. The complaint filed against the credit game and its owners, Michael and Valerie Randow. The Federal Trade Commission alleged that the company has illegally charged consumers hundreds and even thousands of dollars for credit repair services that had little to no value and told consumers to invest their COVID-19 government benefits on their unlawful services. In some cases, the company’s services included filing false identity theft reports with the Federal Trade Commission and encouraging consumers to take actions that were unlawful. The FTC asked the court to immediately halt the company’s illegal operations, a point to receiver and freeze the defendant’s assets. The court issued a temporary restraining order doing so on May 3, 2022. In addition to the core credit repair scheme, the defendants have also taken advantage of the ongoing pandemic by telling consumers to invest pandemic tax benefits into their credit repair scheme. One advertisement used the headline, Free Credit Repair, From the Government. The defendants are based in Florida and have operated credit repair schemes since at least 2019, first using the name wholesale trade line before changing to the credit game in 2020. According to the Federal Trade Commission’s complaint, the defendants claim to have brought in more than 15 million in business through their operations. In its complaint filed against the credit game and the Randows, the Federal Trade Commission alleges the defendants’ deceptive tactics violated the FTC Act, the Credit Repair Organizations Act, the Business Opportunity Rule, the Telemarketing Sales Rule, and COVID Consumer Protection Act. The bad acts that the Federal Trade Commission alleges include deceptive marketing, saying the defendants misled consumers in numerous ways, including lying to consumers about whether their products were legal, whether their products are effective, and whether consumers can get refunds when requested. They also claim credit piggy banking, the complaint alleges the defendants’ pitch of practice known as Credit Piggy Banking. In a piggy banking scheme, a consumer seeks to raise their credit score, pays to be added as an authorized user to a credit card account belonging to someone with higher credit. However, the consumer is an authorized user in name only and does not actually access the account or line of credit. As part of the efforts to remove accurate but negative information from consumers credit reports, the defendants filed thousands of false identity theft reports on behalf of consumers with the Federal Trade Commission, knowingly filing a false identity theft report with the FTC is unlawful. In addition to selling the bogus credit repair services, the defendants also pitch consumers on a supposed business opportunity that consists of reselling the defendants’ own unlawful credit repair services. They use outlandish earnings claims as part of the sales pitch, telling one undercover FTC investigator they could make tens of thousands of dollars every month. The defendants also charge consumers for their credit repair services up front, often thousands of dollars using high pressure sales tactics and failing to give consumers required information before they pressure them to buy. Charging advance fees for credit repair services is illegal. In addition, the FTC’s investigation found that defendants had purchased a trade line database from the previous FTC defendants, William Erie and BMS Inc., who were sued by the Federal Trade Commission for operating a bogus credit repair scheme in 2020. The randos were aware of the FTC’s investigation into Erie and BMS when they bought the trade line database. The complaint says in December of 2019, defendants purchased a card holder database of 220 card holders controlling 524 credit accounts who were willing, for fee, to add unrelated authorized users to their accounts from William Erie, CEO of Boost My Score and BMS Inc. Erie and these companies collectively called BMS charge the randos $152,500 for access to this card holder database. This case is yet another example of credit repair services that claim all sorts of magical things, including adding trade lines to your credit report, which are like merchant lines of credit, adding line items to your credit report that show that you have better credit than you do, but really you’re only an authorized user. And then encouraging you to commit credit fraud and in this case identity theft fraud, all in an effort to repair your credit. The truth is you can repair your credit with some smart actions that you can take care of yourself. For example, if you have outstanding bad credit items, you can resolve those. If your credit isn’t improving as fast as you want, you can get new, unsecured credit, use it appropriately and your credit score will build. Most importantly though, the one thing that you can do to boost your credit score is pay your bills on time and let time pass from the last time you had some sort of financial misfortune. This is Steve Rhode, your Get Out of Debt Guy.