In a wholesale crackdown on scam artists who promise consumers a new credit identity without telling them that if consumers take their advice, they'll be violating federal law, the Federal Trade Commission, U.S. Department of Justice, U.S. Postal Inspection Service and eight state and local law enforcers announced today that they have filed another 16 law enforcement actions against defendants who falsely claim to help consumers obtain new credit histories through new identification numbers.
"These credit repair con games are spreading like wildfire on the Internet and in unsolicited junk e-mail," said Jodie Bernstein, Director of the FTC's Bureau of Consumer Protection. "They target credit-impaired consumers, anxious to repair their credit profiles. But we want consumers to get the message that using a false Social Security number -- such as a taxpayer I.D. number -- to apply for credit violates federal law and will only compound their problems."
The schemes work like this: fraudulent actors place ads in newspapers, magazines or, increasingly, on the Internet, selling a service they say can help consumers create a new credit identity. Using claims like,
"Anyone can have a New Credit File virtually overnight. . . ";
"WIPE OUT ALL OF THE OLD BAD CREDIT ON YOUR OLD FILE. . . .'; and
"Credit Start Over. There's a way to obtain a new Social Security No. . ."
they offer to sell a "kit" or "package" for prices ranging from $21.95 to $129.95. The "kit" advises consumers to apply for a new identification number from the I.R.S., Social Security Administration or credit reporting agencies and to use that number in place of their Social Security number when applying for credit. Consumers are frequently given advice about how to develop whole new credit profiles by doing such things as getting new driver's licenses using the new I.D. number and advised about places that will give consumers "starter credit" using the new number. Passing off any such number as a consumer's Social Security number violates federal law and has been prosecuted vigorously by the federal criminal authorities.
"For the past five years we have seen a significant number of fraudulent schemes involving the illegal use of federal employer identification numbers," said William Cowan, Special Agent in Charge of the Atlanta field office of the Treasury Inspector General for Tax Administration. "Individuals who are selling the idea of using these IRS issued employer identification numbers illegally will be aggressively investigated and prosecuted."
Seven complaints filed by the FTC, along with another filed by the Department of Justice at the FTC's request, allege violations of the Credit Repair Organizations Act and the FTC Act. The FTC and the Justice Department have asked U. S. District Courts to permanently enjoin the illegal claims and order consumer redress or civil penalties for the defendants.
On February 2, 1999, the FTC and other federal, state and local law enforcers announced 40 law enforcement actions against file segregation scammers. The law enforcement actions announced today are a follow-up to that sweep. "If the credit repair con artists thought the coast was clear after our last sweep, they were wrong," said Bernstein. "We want scammers to know that we're on the beat and we're here to stay."
In addition to the federal cases, eight cases were announced by state and local law enforcers, including the Maryland, New Jersey, Oklahoma and Texas Attorneys General; the Orange and Santa Clara County, California District Attorneys; the San Diego City Attorney; and the U.S. Postal Inspection Service.
The Commission vote to file the complaints was 4-0.
NOTE: The Commission files a complaint when it has "reason to believe" that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant has actually violated the law. The case will be decided by the court.
Copies of the complaints and free information for consumers about credit and credit fraud are available from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-FTC-HELP (202-382-4357); TDD for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.
(FTC File No. P99 7602)