This Credit Repair Scam Could Land You in Court

Privacy number ruse won't help you with credit repair: Internet Scambusters #674

Credit repair scammers are up to all sorts of tricks to try to convince victims they can straighten out their credit record -- for a fee.

But victims won't just end up out of pocket by paying for a service that likely won't work, they could also find themselves in court accused of deception.

In this week's issue, we'll tell you how this scam works. And we have a warning for students about bogus "late tuition fee" calls.

Let's get started...

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This Credit Repair Scam Could Land You in Court

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In addition to the sheer misery that scams cause, there's a handful of con tricks that can also land victims in trouble with the law -- like some credit repair scams.

One of these scams is based on a code called a Credit Privacy Number or Credit Profile Number (CPN).

A CPN is supposedly a nine-digit code that they'll tell you can be used in place of your Social Security number (SSN) when you apply for credit, thereby bypassing your existing credit record.

So, the idea is particularly attractive to people with a low credit score or poor credit record.

There's a vague basis of truth in the CPN concept, according to Mike Sullivan, director of education with the nonprofit credit counseling agency Take Charge America.

He says CPNs have been used in the past in place of SSNs to protect the identities of congressional representatives and in witness protection programs.

It's also true, Sullivan told the New York Times MainSt.com website, that if you want to create a credit file with one of the credit agencies, you don't legally have to give them your SSN.

Credit agencies will use alternative identifying information like your name and address to check you out, although the process could take longer than using an SSN.

But a belief has grown up that, since you don't need to give your SSN, you can also invent a nine-digit number as a personal identifier provided it hasn't already been used.

But the unspoken reason for doing this is to imply that the number is your SSN, with a clear credit record.

The three main credit agencies say nothing about CPNs on their websites so there's no reason to think they would accept them -- although some consumer websites continue to report it as legitimate. But even if it were, creating a CPN would be pure guesswork.

And if you found a number that was accepted and isn't already a current SSN, it could have belonged to a now-deceased person or it could subsequently be a number allocated by the Social Security Administration to a new applicant.

But that hasn't stopped phony and dubious credit repair agencies offering CPNs for sale at prices reportedly ranging from $40 to $3,500.

Sometimes, the numbers are stolen, legitimate numbers, often belonging to children.

Other times, the CPN is totally fictitious, a number plucked out of thin air, in which case one of three things may happen when the user applies for credit.

1. The number may match an existing Social Security number, which would land you in hot water.
2. The application will be rejected.
3. As explained above, although highly unlikely, a new credit record theoretically could be created allowing the user to go ahead with the transaction they were planning without revealing their true credit status.

The point, of course, is that these scenarios result in an illegal outcome, for which the applicant can end up in court charged variously with ID theft, fraud or other financial crimes.

As an alternative, some disreputable credit repair agencies may tell customers to apply for a legitimate Employer Identification Number (EIN) from the IRS and use this instead, but again these can't be used as a substitute for a Social Security number.

The Federal Trade Commission (FTC) warns that it's a federal crime to:

• Lie on a credit application.
• Misrepresent a Social Security number.
• Get an EIN under false pretenses.

"The bottom line is that if you use the number they sell you, you could face fines or time in prison," says the Commission.

Unfortunately, the legitimate use of CPNs remains a somewhat gray area, not helped by the fact that there's no clear public information on how to get one.

The Social Security Administration has denied that it issues them.

The one thing for sure is that they're not legitimately available for sale via credit repair agencies.

The bottom line is that you should not be tempted into paying for or using a CPN.

If you need to repair your credit record, it's feasible to tackle it yourself or work with a bona fide counseling service.

For information on repairing your credit record yourself, see this useful article from the FTC: Credit Repair: How to Help Yourself.

And to get free or affordable credit counseling advice, start with the National Foundation for Credit Counseling or see this FTC report: Choosing a Credit Counselor.

Alert of the Week

Now that college is in full swing, a quick warning to students about an impostor scam threatening to drop them from classes.

A caller claims the student is late with tuition fees and warns they'll be dropped unless they make immediate payment by prepaid debit card.

If you (or a student in your family) receive this call, hang up and contact the college finance office.

Time to conclude for today -- have a great week!