Credit Repair Pyramid Scheme Over $213 Million Scam

Financial Education Services Shut Down After Bilking Consumers of Over $213 Million. A worthless service promotes easy credit fixes, and a pyramid scheme where few, if any, have an opportunity to make money.

Financial Education Services has been fined 1 million for pyramid fraud

 

Federal Trade Commission shuts down the credit repair pyramid scheme, which built more than 213 million from consumers. 

 

The Federal Trade Commission has taken action against financial education services and their owners, as well as a number of related companies, for scamming consumers out of more than $213 million turned on $30 million, lowering them with a false promise of an easy fix and recruiting them in to join a pyramid scheme selling the same worthless credit repair services to others.

These defendants collected millions in junk fees as part of the permits game to peddle phony credit repair products.

 

So what we got here, according to the FTC complaint, Michigan-based financial education services, also doing business as United wealth services, has operated its scheme since at least 2015. 

 

So this has been operating since 2015. So seven years on, they’ve just been prosecuted. So you can see, you know, just because something’s been running a while doesn’t make it legal. So that’s what you got to be aware of now deceived consumers about credit repair sold in effective rent payment products, charged consumers upfront for credit repair, and operated a pyramid scheme. So they tried to get around the legalities of pyramid schemes by putting these products in place. But obviously, it didn’t work.

The FTC’s 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:

  • Financial Education Services deceives consumers about credit repair by using social media, telemarketing, false testimonials, and a network of sales agents across the country, claiming to remove negative information from credit reports and increase credit scores with false promises. 

  • It also sells an additional product that supposedly sends rent payment information to credit bureaus, but the complaint notes that this information is not generally part of consumers’ credit scores, as well as that many credit bureaus do not accept this kind of information directly from consumers.

  • Consumers were charged upfront for credit repair services, which is illegal. Consumers are charged $99 upfront and then recurring monthly fees of up to $89 for ineffective services, according to the complaint. Additionally, the company fails to provide consumers with important information required by law, such as refund and cancellation policies.

  • A pyramid scheme was operated by the company, in which consumers were encouraged to become Financial Education Services “agents” themselves, selling the company’s services to other consumers. It is claimed by agents that consumers can earn bonuses of tens of thousands of dollars and make more than $1,000 weekly using this scheme. Consumers are also accused of paying hundreds of dollars for the company’s bogus credit repair services each month, even though they don’t need them. Its compensation structure resembles a pyramid scheme, with increasing levels of compensation and titles based on how many members you recruit. In most cases, consumers don’t make their promised income, and many lose money as agents.

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