FTC says credit repair company sold bogus services and pyramid scheme

If your credit score is low, the promise of a solution that can help you quickly gain the economic benefits that a high credit score brings may be appealing. And, if the company offering the fix also says you can make a lot of money selling their credit repair services, the offer may seem perfect. But the FTC says the credit repair services offered by Financial Education Services (FES) are a sham and its supposed money-making opportunity is a pyramid scheme.

In a newly filed lawsuitFTC says FES, which also does business as United Wealth Services, defrauded more than $213 million with a scheme that combines billing worthless credit repair services and recruiting them to sell the same fakes services to others.

FES claims it can quickly boost people’s credit scores by hundreds of points by permanently removing negative information from their credit reports and adding positive information. But the FTC says FES services accomplish little or nothing. For example, the FES sends customers form letters to send to the credit bureaus to dispute negative items, but the letters do not include supporting documentation, so they rarely result in items being removed, according to the FTC.

The complaint says FES charges people $99 up front for its services, plus up to $89 per month. It is illegal for a credit repair company to charge people before they have fully performed the services it promises. Additionally, according to the complaint, FES is not giving people important information to which they are entitled under the law, including written information about the full cost of its services and its refund and cancellation policies.

According to the complaint, FES also pressures people to become FES “agents,” telling them that they can earn tens of thousands of dollars a month by selling FES services to other consumers and recruiting them to become FES agents themselves. But, according to the FTC, FES’ alleged business opportunity requires its agents to pay hundreds of dollars to join and advance in the company. And, according to the FTC, in classic pyramid scheme style, FES encourages hiring new agents rather than selling credit repair services. The complaint accuses few, if any, of earning the promised income, and many are losing money as FES agents.

If you are working to repair your credit, Repairing Your Credit FAQ contains information on building your credit and spotting scams. And, if you’re considering investing in a business that requires you to recruit other investors, read this information on the detection of a pyramid scheme.

Comments are closed.