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Agencies Crack Down on Credit Fraud

Seventeen law enforcement agencies filed 43 actions against credit fraud companies this week as the Federal Trade Commission and the National Association of Attorneys General launched a campaign against fraudulent credit card marketers.

Of the complaints, 14 were filed by the FTC, three by the Justice Department at the request of the FTC, 21 by Attorneys General and five by the Treasury Inspector for Tax Administration, formerly the IRS' Internal Security Division.

The complaints centered on defendants who said they can help consumers obtain new credit histories by giving them new identification numbers — a practice known as “file segregation.” Using e-mail messages, magazine and newspaper ads or Internet sites, these companies say they can sell instructions telling consumers how to substitute federally issued, nine-digit employee identification numbers or taxpayer identification numbers for their Social Security numbers. The ads usually make claims like, “Brand New Credit File in 30 Days,” “Erase Bad Credit” or “Anyone Can Have a New Credit File Instantly Overnight.”

At a press conference in Washington, DC, spokespeople from the FTC and NAAG said using a false identification number to apply for credit is a felony.

“The Internet and e-mail are spreading this scam far and fast,” said Jodie Bernstein, director of the FTC's bureau of consumer protection. “America Online reports that credit repair schemes represent one of the biggest categories of unsolicited commercial e-mail. Fourteen of the FTC defendants advertised their services on Internet Web pages. These scams target very vulnerable consumers. They prey on people who are plagued by poor credit — people who may be desperate to develop a clean credit history so they can get a loan, get a job or buy a car.”

The suits were announced in conjunction with the National Consumer Protection Week, an education and law enforcement initiative sponsored by the FTC, National Association of Attorneys General, U.S. Postal Inspection Service, National Association of Consumer Agency Administrators, National Consumers League and the American Association of Retired Persons. The week focused on raising awareness about credit scams and on teaching consumers how to protect themselves. The U.S. Postal Service and the U.S. Postal Inspection Service — an agency of the USPS — — focused on consumer fraud targeting the elderly.

Amy Muraski, public information officer for the inspection service, said soon consumers will be able to file complaints about fraudulent companies online. Currently, they must go to their nearest post office and fill out a fraud complaint form or call their local postal inspector.

“[Last] year, we received over 69,000 complaints,” she said.

The Direct Marketing Association also joined in the week's activities, encouraging its members to contact the FTC or visit the National Consumer Protection Week's Web site (www.consumer.gov) to access more information. It also provided the nation's consumer media with tips to protect against theft of credit information and to ensure safe online shopping using credit cards.

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