Credit Repair Operator Settles FTC Charges

New Credit Identity Scam Violated Federal Laws: FTC

June 21, 2001

The operator of a Web site that sold credit repair advice and promised "perfect credit . . .instantly" has agreed to settle Federal Trade Commission allegations that his scheme violated federal law.

The scam was identified in "Operation New ID - Bad IDea," an FTC initiative targeting illegal "credit repair" services. The settlement bars future violations of the Credit Repair Organizations Act and the FTC Act; bars deceptive claims about file segregation -- including claims that it is legal -- and prohibits the defendant from using or selling his customer lists.

In addition to the civil case brought by the FTC against Clifton W. Cross, on May 9, 2001, Cross was sentenced to forty nine months in federal incarceration and ordered to pay nearly $171,000 in restitution as part of a guilty plea resolving criminal charges stemming from the scam. The criminal case was prosecuted by the United States Attorney for the Western District of Texas.

The defendant used his Web site to claim he could help consumers obtain new credit histories by obtaining new identification numbers through a practice known as file segregation. The defendant sold instructions about how consumers could substitute federally-issued, nine-digit employee identification numbers or taxpayer identification numbers for social security numbers and use them illegally to build new credit profiles that would allow them to get credit they may be denied based on their real credit histories. Using "file segregation" to alter your credit history is a felony.

Settlement of the FTC charges bars the defendant from representing that other government identification numbers can be lawfully used to conceal actual credit histories or that using alternate numbers is legal. In addition, the settlement bars him from misrepresenting material facts concerning credit-related products or any other product or service. The settlement also bars violations of the Credit Repair Organizations Act, which prohibits charging or accepting payment for credit repair services before the services are provided and advising consumers to hide their true credit history. The settlement also bars the defendant from using or selling his customer lists. Finally, the settlement contains record keeping provisions to allow the FTC to monitor compliance. A financial declaration filed by the defendant indicates an inability to provide redress for consumers. The settlement contains provisions to allow reopening of the issue if the defendant is found to have misrepresented his inability to pay.

The settlement with Clifton W. Cross, individually and doing business as BUILD-IT-FAST, was filed in United States District Court for the Western District of Texas, Midland-Odessa Division. The Commission vote to accept the settlement was 5-0.

Related Documents:

File Segregation: New ID is a Bad IDea

Building a Better Credit Record

FTC v. Clifton W. Cross, individually and doing business as Build-It-Fast (D.C. Western Distict of Texas)

Stipulated Order [PDF 31KB]

The above article was reprinted from an announcement on the Federal Trade Commission web site dated June 21, 2001. Check the FTC web site for any changes to the article.

This page was last modified on July 22, 2007.

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