Financial Education Services, a Michigan-based company that also operates under the name United Wealth Education, has allegedly been running its scheme since at least 2015.
With monthly fees as high as $90, the organization advertises that it can help customers get negative information off of their credit reports and raise their scores by hundreds of points.
According to the complaint, their methods are frequently ineffective and frequently lower customer credit scores.
Financial Education Services and its proprietors, Parimal Naik, Michael, Christopher, and Gerald Toloff, as well as several affiliated businesses, have been targeted by the Federal Trade Commission for defrauding customers out of more than $263 million.
An expansive phony credit restoration operation has been temporarily shut down by a federal judge in response to an FTC complaint.
According to the FTC’s complaint, the business preys on people with bad credit by enticing them in with the false promise of a quick fix and then recruiting them to join a pyramid scheme where they are forced to offer the same useless credit repair services to others.
According to Samuel Levine, Director of the FTC’s Bureau of Consumer Protection, “These defendants collected millions in garbage fees as part of a pyramid scheme that sold fake credit repair goods.” We will continue to prosecute businesses that prey on families’ financial hardships. “We are glad that the court shut down this enterprise and froze its assets.”
According to the FTC’s investigation, the company’s scam entails charging customers for these useless credit repair services while simultaneously pressuring them to sign up for a pyramid scheme that involves selling the useless services to new customers.
According to the lawsuit, the firm’s actions violate the Telemarketing Sales Rule, the Credit Repair Organizations Act, and the FTC Act.
The agency claims that the defendants do the following:
Financial Education Services deceives customers by making false claims in both English and Spanish that they can improve credit scores and delete negative information from credit reports through social media, telemarketing, fake “testimonials,” and a nationwide network of sales agents.
The complaint claims that the company frequently just gave customers template letters to send to credit bureaus, failing to produce the desired results.
Sold ineffective rent payment products
Additionally, the company purports to sell a product that sends information about rent payments to credit bureaus, but the complaint notes that many credit bureaus do not accept this kind of information directly from consumers and that this information is typically not included in consumer credit scores.
The business illegally charges customers up front for credit repair services. According to the complaint, customers are first charged $100 up front and then must pay an ongoing monthly fee of up to $90 for the ineffectual services.
Additionally, the business frequently fails to give customers crucial information required by law, such as refund and cancellation policies.
Operated a pyramid scheme
The business also urges customers to work as their own “agents” for Financial Education Services, promoting the business’s products to other customers. Agents make ludicrous income claims, claiming that participants in the scheme can earn incentives worth tens of thousands of dollars and make more than $1,000 every week.
According to the complaint, customers are required to pay hundreds of dollars to join the scam and pay the business each month for phony credit repair services even if they are not required.
The scheme’s compensation system has the characteristics of a pyramid scheme, with escalating levels of pay and titles based on the number of members attracted and a focus on how crucial it is to bring in new participants.
Few, if any, customers ever receive the income they were promised, and many customers actually lose money when acting as customers’ agents.
The staff was given 4-0 commission approval to file the complaint and ask for a temporary restraining order. The Eastern District of Michigan U.S. District Court received the complaint.
The Georgia Office of the Attorney General Consumer Protection Division was a great help to the FTC in initiating this lawsuit.
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SERVICE MARKETED BY (UWE) AGENTS AND DELIVERED BY UNITED CREDIT EDUCATION SERVICES (UCES)
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