You’ve no doubt heard of three-card riding, a game of confidence in which players are asked to wager an amount of money assuming they can find the “money card” among three face-down playing cards. .
Now comes the “three-round burst,” a trick identified in a recent Federal Trade Commission case in which a so-called credit repair company disputes all negative items in someone’s credit records, not a , not twice but three times until he all but bullied the credit reporting agency into finally giving in to the request to remove the items in question.
It’s a “credit wash” trick plaguing the auto loan industry, according to Point Perspective, a risk management firm. It’s now starting to permeate the mortgage industry and if it hasn’t already, it’s probably heading into multifamily.
In April, the FTC obtained an injunction against Turbo Solutions, which also goes by the name of Alex Miller Credit Repair, and Miller himself to end what it claimed was a deceptive credit repair program that claimed it could repair consumer credit. Of course, he often failed to deliver.
The company claimed it could remove negative information from people’s credit histories through an “advanced dispute”. But the FTC says Turbo and Miller engaged in creditwashing, which is a systematic method of challenging negative trade lines under false pretenses. A false claim is to file an affidavit stating that you are the victim of identity theft.
The FTC accuses the company of filing identity theft claims on the consumer watchdog agency’s website, IdentityTheft.gov, to challenge commercial lines, sometimes with the knowledge of the consumer.
When a credit reporting agency suspects that an identity theft report has been wrongfully filed, it may refuse to remove the negative items from its files. But that didn’t stop Miller and his companies.
Instead, they would force credit reporting companies to comply by filing the same identity theft complaint over and over again until they relented.
Credit washing, which is defined as a systematic cleansing of a candidate’s negative business lines by alleging identity theft on all accounts, is big business. But this is not limited to the type of harassment alleged by the FTC in the Miller case. According to Point Perspective, this also includes using credit privacy numbers to create a new, clean credit report that does not reflect an applicant’s true credit history and artificially increases someone’s credit score.
There are other types of fraud that landlords and property management companies should also be aware of.
Point Perspective, which uses artificial intelligence to root out fraud, says it has identified more than 6,700 fake employers who, in the automotive sector alone, are linked to more than $1.7 billion in funding applications. And the risk management firm claims to identify “up to 100 new fraudulent employers” each week.
These issues are linked to fake websites and fake pay stubs, and are often used to trick lenders into calling fake phone numbers to verify an applicant’s fake employer.
Additionally, the risk management firm reports that among applicants who used fake employers, they also used fake credit records, i.e. synthetic identities.
As you might expect, candidates using fake credentials put companies at risk. In the automotive sector, they have a 40-100% defect rate. In the apartment sector, this could leave landlords without rent payments and lead to criminal activity in these communities.
“IdentifyTheft.gov is a resource for consumers, not scammers,” FTC Consumer Protection Bureau Director Samuel Levine said in a statement announcing the Turbo/Miller injunction. “Those who abuse this resource by filing false reports can expect to hear from us.”
The Justice Department also pledged to use “every tool” at its disposal to prevent credit repair companies from engaging in this type of illegal behavior.
Nevertheless, it would be wise for multi-family interests to take this into account. Rather than waiting for an attack, property managers should take whatever steps they deem necessary to protect themselves from these types of issues. Closing your eyes could be expensive.