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Home News

FTC Settles with Credit Repair Scammers

August 5, 2024
Reading Time: 2 mins read
in News

The U.S. Federal Trade Commission (FTC) has reached a settlement with Financial Education Services (FES) and its owners for running a fraudulent credit repair pyramid scheme. The scam deceived consumers with poor credit by promising quick fixes and recruiting them into selling bogus credit repair services, ultimately charging upfront fees and collecting millions through deceptive practices. The defendants earned around $467 million from their illegal operations, though the settlement will result in only $12 million being paid for consumer refunds.

The FTC’s complaint highlighted how the scheme preyed on vulnerable consumers, making false claims about improving credit scores and offering opportunities to make money by recruiting others. Consumers were misled about the effectiveness of credit repair services and faced recurring monthly fees for services that failed to deliver. The defendants also made exaggerated income claims, suggesting participants could earn tens of thousands of dollars through recruitment.

As part of the settlement, several of the defendants are banned from providing credit repair services or engaging in multi-level marketing. Financial penalties range from $215,000 to $5.5 million for individuals involved, and assets including cars, boats, and properties were seized. The settlement aims to return part of the funds to affected consumers, though it represents only a small portion of the total amount obtained through the fraudulent scheme.

The FTC continues to warn consumers about the risks of credit repair scams, emphasizing that legitimate credit repair should not involve upfront fees or false promises. Consumers are urged to be cautious and to seek legal, free methods to dispute inaccuracies in credit reports. The agency remains committed to stopping deceptive credit repair tactics and protecting struggling individuals from similar schemes.

 

Reference:

  • FTC Reaches Settlement with Scammers Behind Credit Pyramid Scheme
Tags: August 2024Cyber AdvisorsCyber NewsCyber News 2024Cyber threatsCybercrimeFinancial Education ServicesScamsSettlementU.S. Federal Trade Commission
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