Sixteen defendants targeted in a law enforcement crackdown on illegal credit repair services have agreed to settle federal charges that the “file segregation” advice and products violated federal law. The charges were brought by the Federal Trade Commission or the United States Department of Justice at the FTC’s request. The settlements will provide consumer redress for victims of the scam; bar future violations of the Credit Repair Organizations Act; bar deceptive claims about file segregation — including claims that it is legal — and require that the defendants notify their victims that using a false identification number to apply for credit is a felony.
The defendants used the Internet and other media to claim they could help consumers obtain new credit histories by obtaining new identification numbers through a practice known as file segregation. The firms sold instructions about how consumers could substitute federally-issued, nine-digit employee identification numbers or taxpayer identification numbers for social security numbers and use them illegally to build new credit profiles that would allow them to get credit they may be denied based on their real credit histories. Many of their ads claimed the practice was legal.
Settlement of the FTC charges will bar the defendants from violating provisions of the Credit Repair Organizations Act that prohibit charging or accepting payment for credit repair services before the services are provided. In addition, the settlements would bar them from representing that other government identification numbers can be lawfully used to conceal actual credit histories and from misrepresenting material facts concerning credit-related products or any other product or service.
The defendants would be required to notify their victims of the illegal nature of their products and would be barred from selling their customer lists. Thirteen of the settlements provide for full consumer redress. Financial declarations filed by three defendants indicate an inability to provide redress. Their settlements contain provisions to allow reopening of the issue if defendants are found to have misrepresented their inability to pay. All the settlements contain record keeping provisions to allow the FTC to monitor compliance.
The settlements of the “Operation New ID – Bad IDea” sweep are with Mehmet Akca (FTC File No. X990018); Frank Muniz (FTC File No. X990020); LSQ International (FTC File No. X990024), Standard Business Services (FTC File No. X990021); Pro Se Publications (FTC File No. X990023); Ross Sanford Leiss (FTC File No. X990026); Michael Lyons (X990027); Edward Lane (FTC File No. X990032); All About Communications (FTC File No. X990030); Express Financial Planning (FTC File No. X990034); Financial Publishers of America (FTC File No X990033); New Start (FTC File No. X990028); Frederick P. Ray (FTC File No. X990066); Internet Publications (FTC File No. X990064); P.M.. Enterprises (FTC File No. X990047); Fresh Start (FTC File No. X990044).