Mortgage Lenders Should Be Aware of Risky Credit Repair Activity That Is Often Hidden From View

The FTC is cracking back at the growing problem of credit washing and people filing false identity theft claims on their website.

Today, they obtained an order halting a credit repair scheme that allegedly bilked consumers out of millions of dollars by falsely claiming they will remove negative information from credit reports, while also filing fake identity theft reports to explain negative items on customers’ credit reports.

The company Turbo Solutions, which also goes by the name Alex Miller Credit Repair was served an injunction which was filed by the Department of Justice

The DOJ alleged that Alex Miller Credit Repair operates a deceptive credit repair scheme that claimed it can help repair consumers’ credit through a “two-step process,” but it often failed to deliver on its promises.

The company claimed it could remove negative information from consumers’ histories through “advanced disputing” of negative items on a consumer’s credit report and by adding “credit building products” it could also help to boost their credit scores.

But in reality, many of the customers of the credit repair company were left holding the bag with nothing to show for it.

Credit Washing Was The Game

Before Alex Miller got into credit repair, he reportedly worked for American Express and First Data Resources and that is where he first learned about credit. He started Alex Miller Credit Repair from a small apartment in Houston and grew it into a multi-million dollar business.

If you look at Alex Miller’s Instagram page, it’s obvious the guy has made a lot of money. But according to the FTC, he was engaging in a practice that some refer to as Credit Washing which involves systematically disputing negative tradelines on a credit bureau using false pretenses – such as filing an affadavit claiming you are the victim of identity theft.

In this case, the FTC alleges he would file bogus identity theft claims on the FTC’s IdentityTheft.Gov website to dispute tradelines – sometimes with the customers knowlege. Even though customers of his credit repair business would pay up to $1,500 for this service, most of the banks would deny the fraud claims leaving the customer with benefit.

A 3 Round Burst of Credit Repair – The Most Aggressive In The Business

Alex Miller boasted that his company used one of the “most powerful” and “most aggressive” credit repair strategies in the business.

He called it the “3 Round Burst” and each round consisted of very aggressive disputes lasting 40 days each. He even bragged that he could remove the toughest tradelines like Bankruptcies, Home Foreclosures, and Evictions”

His strategy is not unlike many of the other companies specializing in credit washing that will continue to issue disputes on consumers’ behalf over and over and over again.

Complaints Roll In From Consumers

Credit repair is big business, and based on Alex Miller’s Instagram page he looks like he has made a pretty good living with it. He claims to be “The Goat” but his results hardly seem to match that claim if you look at his ratings on Yelp and other sites.

According to the FTC, Miller was illegally charging clients $1,500 upfront to perform his credit repair services. For this, he claimed he would remove the negative tradelines within 40 days and boost the credit scores of the customer from 50 to 200 points.

But while Miller lived the high life, many customers complained about the lack of service they were receiving.

Yelp reviews for Alex Miller Credit Repair matched what you might expect from a credit repair company that failed to deliver. Mostly negative reviews dot his Yelp profile and he had a 2-star average rating.

But not all customers were complainers if you are to believe Miller’s Instagram post. Some of the clients seemed to land luxury cars and even homes after he cleaned their credit.

Mortgages Are At High Risk of Credit Repair Fraud Schemes

Credit repair schemes are often invisible to the naked eye which makes them extremely difficult to identify. When new finance applications are received, how do you know if the consumer did not wash their credit?

Alex Miller’s credit repair company boasted that he could help clean consumer’s credit so that they could get new homes. Credit repair companies actively market their ability to help consumers get mortgages in this manner.

Since Mortgage lenders have relied on traditional identity theft tools, they may not be aware of three types of credit repair schemes that they are being impacted by

1. Synthetic Identity – Use of Credit Privacy Numbers (CPN’S) to create new clean credit file that do not reflect the borrowers true credit profile.
2. Credit Washing – The systematic cleaning of borrowers negative tradelines by systematically claiming identity theft on all of their accounts.
3. Credit Boosting – The purchase of authorized tradelines to boost their credit score.

Mortgage companies are increasingly becoming impacted by these schemes which can be very well hidden to untrained underwriters.