The Federal Trade Commission (FTC) has agreed to a settlement with a credit repair company after filing a complaint that accused it of lying to consumers about its ability to improve credit scores and lower mortgage rates.
The operators of BoostMyScore.net (BMS) allegedly told consumers that it could “drastically and immediately” increase credit scores by engaging in a practice called “piggybacking.” The idea behind the concept is that consumers can improve their own scores by listing themselves on another person’s well-maintained credit account. However, the FTC says that isn’t how building credit works.
“Good credit isn’t for sale. This company charged people thousands of dollars based on hollow promises that ‘piggybacking’ on a stranger’s good credit would raise their credit score or help them get a mortgage,” said Andrew Smith, FTC director of the Bureau of Consumer Protection.
The defendants reportedly charged between $325 to $4,000 in illegal fees for its services.
In the FTC’s complaint, the defendants were charged with violating the Credit Repair Organizations Act, the FTC Act, and the Telemarketing Sales Rule.
BMS will pay over $6.6 million under the terms of the settlement, but that amount will be largely suspended after a payment of just under $65,000 due to an inability to pay. The company is also barred from collecting advance fees for credit repair services and selling fake access to third-party credit accounts.
Cases like these are prime examples of the importance of knowing how credit scores work. To learn more, visit ConsumerAffairs’ page here.