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masdeocho
Posts: 2,050
Registered: ‎04-17-2007
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Re: What kind of scam is this? Tuscani, TNWM, Noah?

It's legal until someone gets prosecuted and the law is tested.  I think when that happens, it will be found to be an illegal practice because you are providing fraudulent information on a mortgage or credit application (by representing that you have a credit history that is not yours).  But until then, and while AUs are still counted in FICOs, the beat goes on.
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Bartender, bring another round of FICOtinis please!

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TheNewWorldMan
Posts: 2,374
Registered: ‎03-15-2007
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Re: What kind of scam is this? Tuscani, TNWM, Noah?

But would it really be illegal, even if tested?

Think about it. I give someone a $500 line of credit, but the "credit" is in non-liquid form that they can't use. I charge them $39.99 up front plus $5 a month for the credit line, deducted from their checking account. I then report to the credit bureaus that my client has a $500 line of revolving credit with a $39.99 balance, $5 minimum due monthly, and it is paid every month in good standing.

Of course, lawyers could make it work far more slickly than I have it described above, but seriously, what would be illegal? Unethical? Perhaps. But I'm reasonably certain the right lawyers could set the product up in such a way that it would pass legal muster without a problem.
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in a credit-scoring postnuclear Stone Age...
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ilovepizza
Posts: 3,071
Registered: ‎05-17-2007
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Re: What kind of scam is this? Tuscani, TNWM, Noah?

[ Edited ]

TheNewWorldMan wrote: But I'm reasonably certain the right lawyers could set the product up in such a way that it would pass legal muster without a problem.
That was the exact type of product I saw advertised. I am still looking for the website. I used to be able to find it easily, I can't find it now. Still looking.

Message Edited by ilovepizza on 06-09-2007 03:32 PM
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ilovepizza
Posts: 3,071
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Re: What kind of scam is this? Tuscani, TNWM, Noah?

I found the card I was talking about!!! And the answers to your questions.

http://www.oag.state.ny.us/press/2004/mar/mar12a_04.html

Department of Law
120 Broadway
New York, NY 10271 Department of Law
The State Capitol
Albany, NY 12224

For More Information:
518-473-5525 For Immediate Release
March 12, 2004

COURT FREEZES FUNDS OF ADVANCE FEE CREDIT CARD SCAM
Spitzer Files Lawsuit Against Chautauqua County Company


Attorney General Eliot Spitzer today announced that his office has filed a lawsuit against an advance-fee credit card scam operating in Western New York.

According to legal papers, Credit Card Services and its operator, Richard E. Wood and its former operator, Michelle A. Wood, prey upon consumers who, due to poor credit histories or insufficient income, have been unable to obtain credit cards. Credit Card Services is accused of falsely advertising to desperate and vulnerable consumers who have little access to credit, that for an advance fee it will issue a general purpose credit card with generous credit limits.

"Too often, financially-burdened consumers are preyed upon by scams offering false hope of access to credit," Spitzer said. "When it comes to credit card offers, consumers should not pay in advance regardless of the promise or guarantee."

Credit Card Services places advertisements in pennysavers or other free community newspapers offering unsecured credit cards with a guaranteed approval of up to $7,500 regardless of credit history or bankruptcy. Through direct mail solicitations, Credit Card Services also represents that, for a processing fee of between $49 - $89, the consumer is guaranteed to receive an unsecured credit card irrespective of the consumer's credit situation.

Credit Card Services requires consumers to complete application forms and to provide personal financial information, including their social security numbers, even though the company does not issue credit and has no legitimate use for this information. This company's compiling and maintaining such records poses a risk to consumers of identity theft.

Consumers who mail in payments and application forms, however, do not receive the promised credit card. Instead, some consumers receive a list of banks which Credit Card Services claims will issue credit. Other consumers receive nothing.

In commencing the enforcement action, Spitzer's office obtained a restraining order freezing approximately $8,000 of ill-gotten funds held by Richard Wood in a Chautauqua County bank. The lawsuit filed by Spitzer's office seeks full restitution for injured consumers, civil penalties for violations of consumer protection laws and court costs.

The lawsuit also seeks a court order barring Wood and Credit Card Services from engaging in the credit card referral, loan brokering or direct marketing business in New York State unless a $500,000 bond is posted. Spitzer also requests an order requiring Credit Card Services to provide an accounting of the names and addresses of all consumers who have paid a fee for services and to surrender materials which contain personal identification information.

Over the past several months, at least 364 consumers have been victimized by Credit Card Services' fraudulent and illegal scheme.

This case is the fifth enforcement action Spitzer's office has commenced against advance fee credit card scams in the past three years. In 2001, Spitzer's office filed lawsuits against three Canadian-based advance fee credit card scams. In an important decision issued last February, the Appellate Division of State Supreme Court upheld the Attorney General's authority to obtain relief for victims nationwide against an advance fee credit card scam, stating that "New York has a vital interest in securing an honest marketplace in which to transact business..." The office subsequently obtained court-ordered injunctions and judgments against the operators of the scams.

Individuals with questions about the case against Credit Card Services or with complaints related to advance fee credit offers are encouraged to contact Spitzer's office by calling his consumer help line at (800) 771-7755. For consumer tips on advance fee offers, consumers should visit the attorney general's web site at www.oag.state.ny.us/consumer/tips/loan_sharks.html.

This case is being handled by Assistant Attorney General Mark Fleischer of the Consumer Frauds and Protection Bureau.
If we never set higher goals we would never get as far.
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Established Member
Felicity
Posts: 38
Registered: ‎05-22-2007
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Re: What kind of scam is this? Tuscani, TNWM, Noah?



TheNewWorldMan wrote:
.... maze of procedures and dead ends and endless disputes and consumer Whack-A-Mole, sooner or later people start taking matters into their own hands.



What a fitting description!  Too funny! :smileyvery-happy:
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masdeocho
Posts: 2,050
Registered: ‎04-17-2007
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Re: What kind of scam is this? Tuscani, TNWM, Noah?



TheNewWorldMan wrote:
But would it really be illegal, even if tested?

Think about it. I give someone a $500 line of credit, but the "credit" is in non-liquid form that they can't use. I charge them $39.99 up front plus $5 a month for the credit line, deducted from their checking account. I then report to the credit bureaus that my client has a $500 line of revolving credit with a $39.99 balance, $5 minimum due monthly, and it is paid every month in good standing.

Of course, lawyers could make it work far more slickly than I have it described above, but seriously, what would be illegal? Unethical? Perhaps. But I'm reasonably certain the right lawyers could set the product up in such a way that it would pass legal muster without a problem.

Under this scenario, both parties have broken the law.  The company has reported to the CRA that the individual has a line of credit, which he/she does not.  The person has applied for credit on the basis that their history includes a line of credit, which it does not.
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Bartender, bring another round of FICOtinis please!

9.4.2011: TU 805. EQ 815.
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Noah_Bodie
Posts: 4,635
Registered: ‎03-11-2007
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Re: What kind of scam is this? Tuscani, TNWM, Noah?



ObsessedwithmyFico wrote:
I found this on craiglist this morning:
...
***I can legally add a new account in your own name with credit limits from 5,000- to 10,000 at reasonable rates****
***I repeat the account is reported to all three bureaus and in your own name.
...
Seems to me this cannot possibly legal much less ethical..How do they get away with it?


Quite possible legal. Sounds like an AU rental agency. MyFico scoring will stop counting AU accounts in your score, but that don't make it illegal.
 
Ethical I suppose is all in the eye of the beholder. Prostitution is legal in Nevada, outside of Clark County, but some call it unethical or immoral. I say consenting adults.
 
As for getting away with it, heck, there are escort services that advertise on craigslist and elsewhere. [Just between us, on the QT, hush-hush, escort services are a front for prostitution rings.]
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TheNewWorldMan
Posts: 2,374
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Re: What kind of scam is this? Tuscani, TNWM, Noah?

I guarantee you something like this could be set up in such a manner that it would not violate the letter of the law.
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in a credit-scoring postnuclear Stone Age...
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TheNewWorldMan
Posts: 2,374
Registered: ‎03-15-2007
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Re: What kind of scam is this? Tuscani, TNWM, Noah?

And as an addendum, consider this thread here:

http://ficoforums.myfico.com/fico/board/message?board.id=generalcredit&thread.id=10968

This is from a poster who said that CapOne put a restriction on his account so he could not actually use his credit card. Yet his balance and CR kept reporting. So that proves what I said earlier...a CC co could issue a credit line, report it, but keep the customer from actually using it through a "restriction" of some kind.
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in a credit-scoring postnuclear Stone Age...
Moderator Emeritus
masdeocho
Posts: 2,050
Registered: ‎04-17-2007
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Re: What kind of scam is this? Tuscani, TNWM, Noah?



TheNewWorldMan wrote:
I guarantee you something like this could be set up in such a manner that it would not violate the letter of the law.

And I guarantee you that the Feds will find a compelling argument that it does violate the letter of the law.
 
All this is hypothetical.  We won't really know until  (if) there is a test case.
-----------------
Bartender, bring another round of FICOtinis please!

9.4.2011: TU 805. EQ 815.

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