The FTC’s latest credit repair case alleges that the creators of The Credit Game falsely promised to help people improve their credit scores fast and misled them into thinking they could make millions by running their own credit repair companies. The defendants even went so far as to urge people to invest their government COVID-19 benefits in this alleged money-making opportunity.
The lawsuit accuses Michael Rando, his wife, Valerie Rando, and seven of their companies of violating several consumer protection laws, including the Credit Repair Agencies Act (CROA) and the Telemarketing Sales Rule (TSR). At the request of the FTC, a federal court froze the defendants’ assets, appointed a receiver, and ordered them to cease their allegedly illegal operations pending further proceedings in the case.
According to the complaint, the Florida-based defendants have operated an illegal credit repair business since at least 2019, first as Wholesale Tradelines and later as The Credit Game. He alleges that through YouTube videos, websites, emails and telemarketing they falsely claimed they could boost people’s credit scores by hundreds of points in as little as 45 days, remove negative items from a credit report and induce positive credit from a third party. a story of exposing – and improving – a person’s poor credit report through a practice known as “stacked credit”.
But the FTC says the defendants misled and deceived people: Credit repair companies cannot legally remove accurate and timely negative information from a credit report. And, according to the FTC, the defendants’ “services” included filing false identity theft reports with the FTC that falsely claimed that the people’s debts were the result of identity theft, providing false information to credit bureaus and encouraging their customers to lie to the credit bureaus, all of which is illegal.
In addition, the complaint accuses the defendants of presenting a false business opportunity to people wishing to start their own credit repair business. As part of their sales pitch, they allegedly used false and misleading tax returns, telling an undercover FTC investigator that they could make “tens of thousands” of dollars each month. According to the complaint, the defendants urged people to “invest” their government COVID-19 benefits — stimulus checks and child tax credits — in the supposed opportunity.
In addition to CROA and TSR violations, the 16-count complaint alleges that defendants violated the FTC Act, the Business Opportunity Rule, and the COVID-19 Consumer Protection Act (CCPA), which, in part, prohibits deceptive acts or practices associated with government benefits related to COVID-19. Among other things, the complaint alleges to the defendants:
- Billed hundreds or even thousands of dollars to people in advance, which is illegal under CROA and TSR
- Failed to make required disclosures about his business opportunity
- Failed to provide disclosures and documents required by AORC, and
- Did not honor their money back guarantee.
What’s the takeaway? If you sell credit repair services, CROA has a clear list of do’s and don’ts. If you haven’t reviewed it recently, now is a good time to do a compliance check. If you are a promoter, you can also check out the FTCs Advance notice of regulatory proposalan FTC initiative regarding false, misleading, and unsubstantiated tax returns.
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