The operation promised ‘easy credit fixes,’ while charging fees for undelivered services.
5/31/2022 4:30 P.M.
2 minute read
The Federal Trade Commission has taken action against Financial Education Services and its owners, Parimal Naik, Michael Toloff, Christopher Toloff and Gerald Thompson, as well as a number of related companies, for scamming consumers out of more than $213 million, according to a news release.
The news release reports:
“The FTC’s complaint alleges that the company preys on consumers with low credit scores by luring them in with the false promise of an easy fix and then recruiting them to join a pyramid scheme selling the same worthless credit repair services to others.
According to the FTC’s complaint, Michigan-based Financial Education Services, also doing business as United Wealth Services, has operated its scheme since at least 2015. The company claims to offer consumers the ability to remove negative information from credit reports and increase credit scores by hundreds of points, charging as much as $89 per month for their services. Their techniques, according to the complaint, are rarely effective and in many instances harm consumer’s credit scores.
The FTC’s investigation found that the company’s scheme combines charging consumers for these worthless credit repair services with a hard sell to join a pyramid scheme that consists of selling the worthless services to more consumers. The complaint alleges that the company’s practices violate the FTC Act, the Credit Repair Organizations Act, and the Telemarketing Sales Rule. Specifically, the agency alleges that the defendants:
- Deceived consumers about credit repair.
- Sold ineffective rent payment products.
- Charged consumers upfront for credit repair.
- Operated a pyramid scheme.
The complaint alleges that the company also illegally used false information in the process of selling their credit repair and investment opportunities to acquire consumers’ banking and other financial information.”
The FTC voted 4-0 to authorize staff to file the complaint and request for temporary restraining order.
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