FTC Gets Order Halting Credit Repair Scheme Using Fake ID Theft Reports to Remove Negative Tradelines

This was something that was discussed on last week’s webinar on identity theft trends … a credit repair organization has been ordered by a federal judge — at the request of the Federal Trade Commission — to halt operating after allegedly bilking consumer out of millions of dollars by promising to remove negative information from their credit reports by filing fake identity theft reports to explain the transactions.

On behalf of the FTC, the Department of Justice has filed a complaint and obtained an injunction against Turbo Solutions, which does business as Alex Miller Credit Repair and its owner, Alex V. Miller. The company allegedly claimed it could remove negative items from consumers’ credit histories via a process of “advance disputing” and help boost credit scores by adding “credit-building products” to their credit reports. Representatives of the organization allegedly claimed that their process could boost consumers’ credit scores by as much as 200 points and promised results in 40 days. In order to sign up, consumers were required to pay a $1,500 upfront fee.

Once consumers were signed up, the organization filed fake identity theft reports via the FTC’s identitytheft.gov website, claiming that negative items were the result of identity theft.

Ironically enough, for many consumers who signed up for the scam, their credit scores actually went down because the credit reporting agencies failed to remove the disputed items from consumers’ credit reports. None of the consumers on whose behalf the defendant file identity theft reports were the victims of identity theft, according to the complaint.

“Credit repair scams affect consumers who already are suffering from low credit scores,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division, in a statement. “The Department of Justice will use all tools at its disposal to stop credit repair agencies from engaging in unlawful conduct targeting financially vulnerable consumers.”

The defendants are accused of violating the Credit Repair Organizations Act and the Telemarketing Sales Rule.

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