First Annual National Consumer Protection Week Highlights Credit Fraud

Consumers In Every Walk Of Life Affected By Credit Scams

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A week-long series of consumer education initiatives and law enforcement events will mark the first annual National Consumer Protection Week, beginning February 1, 1999. Activities across the country will focus on five different types of credit fraud that can affect consumers in every walk of life. Organized by a broad coalition of public and private sector consumer protection advocates including the Federal Trade Commission, U.S. Postal Inspection Service, National Association of Attorneys General, National Association of Consumer Agency Administrators, National Consumers League, and the American Association of Retired Persons, the week, whose theme is “Credit Fraud -- Know The Rules, Use The Tools,” will aim to raise awareness about credit scams and teach consumers how to protect themselves.

“National Consumer Protection Week is the perfect opportunity to highlight the consumer credit scams that can affect any American, and that cost millions of consumers billions of dollars a year,” said Jodie Bernstein, Director of the FTC’s Bureau of Consumer Protection. “Some of the scams, like credit repair fraud, target consumers with troubled credit histories. But others, like home equity scams, target citizens -- many of them elderly -- with good credit histories who are living on fixed incomes. Still others, like credit identity theft, target only consumers with excellent credit reputations. No consumer is safe. We hope this week will give consumers the opportunity to learn about credit fraud and give them the information to defend themselves. As our campaign slogan says, when it comes to credit fraud, consumers should learn the rules and use the tools,” Bernstein said.

The week long education and protection campaign will focus on five different consumer credit scams:

Credit repair scammers offer assistance -- for a price -- in helping consumers clean up their credit histories. The FTC warns that many of the claims credit repair scammers make -- that they can remove judgments, liens and other negative information from credit records -- are false. Any legitimate help they can offer can be pursued by consumers, themselves, at little or no cost.  

Advance-fee loan scams appeal to consumers who, based on their credit history, can’t get a loan. The scammers hold out the promise that for an advance payment, even consumers with bad credit histories, can get a loan. Some of the scammers make money through the 900 numbers that charges consumers who call to find out about the loans. Others simply charge consumers a fee for a loan that is never delivered.  

Home equity scams target consumers who have good credit, but bad cash flow. They promise credit based not on income, or the ability to repay, but on the equity of the home. Some home equity scams make money based on serial refinancing, which churns the financing and constantly adds costs for consumers. Others actually provide loans the consumers -- based on their income -- are unable to pay. Many consumers lose their homes to these schemes.  

Identity theft occurs when scammers appropriate stolen credit card numbers, social security numbers, mothers’ maiden names or other personally identifying information, to tap into the good credit histories of consumers. They then set up new credit accounts, charge purchases by tapping into existing accounts or drain bank accounts. Frequently, consumers don’t know that their credit identities have been stolen until they learn that new credit card accounts have been set up, or that their bank accounts have been accessed. Congress recently passed the Identity Theft and Assumption Deterrence Act of 1998, which makes it a federal crime to knowingly transfer or use another person’s means of identification to commit any unlawful activity. The Act calls for the FTC to establish procedures within a year to collect complaints from victims of identity theft, provide information to victims, and refer complaints to the appropriate law enforcement and credit authorities.  

File segregation is an illegal gambit promoted by scammers to encourage consumers with bad credit histories to obtain taxpayer identification or employer identification numbers and use them to shield true credit identities from creditors. The scammers charge consumers for advice for how to go about segregating their credit files. File segregation is illegal and consumers who employ it are commiting a felony.

Copies of consumer education materials about credit scams are available from the FTC’s web site at, from 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.

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Claudia Bourne Farrell,
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