FTC shuts down credit repair pyramid scheme’s financial education services, which stole more than $213 million from consumers


The Federal Trade Commission has taken action against Financial Education Services and its owners, Parimal Naik, Michael Toloff, Christopher Toloff and Gerald Thompson, as well as a number of related companies, for defrauding consumers of more than $213 million .

In response to a lawsuit filed by the FTC, a federal court temporarily shut down the sprawling fake credit repair program. The FTC complaint alleges that the company preys on consumers with low credit scores by luring them with the false promise of an easy fix, then recruiting them to join a pyramid scheme selling the same credit repair services. worthless credit to others.

“These defendants collected millions in unwanted fees as part of a pyramid scheme that sold bogus credit repair products,” said Samuel Levine, director of the FTC’s Consumer Protection Bureau. “We are pleased that the court has terminated this operation and frozen its assets, and we will continue to prosecute companies that address families’ economic hardship.”

According to the FTC’s complaint, Michigan-based Financial Education Services, also doing business as United Wealth Services, has operated its system since at least 2015. The company claims to offer consumers the ability to remove negative information from reports of credit and boost credit scores by hundreds of points, charging up to $89 per month for their services. Their techniques, according to the complaint, are rarely effective and, in many cases, hurt consumers’ credit scores.

The FTC investigation found that the company’s system combines charging consumers for these worthless credit repair services with a forced sale to join a pyramid scheme that sells the worthless services to more consumers. . The complaint alleges that the company’s practices violate the FTC Act, the Credit Repair Organizations Act and the Telemarketing Sales Rule. Specifically, the agency alleges that the defendants:

  • Consumers deceived on credit repair: Financial education services use social media, telemarketing, fake “testimonials” and a network of sales agents across the country to deceive consumers, falsely promising in English and Spanish that they can remove information negative credit reports and increase credit scores.The complaint alleges that the company often simply sent consumers form letters to send to the credit bureaus that did not result in the promised changes.
  • Selling ineffective rent payment products: The company also sells an additional product that supposedly sends rent payment information to credit bureaus, but the complaint notes that this information is not generally part of consumers’ credit scores and that many credit bureaus do not accept this type of information directly from consumers.
  • Consumers billed in advance for credit repair: The company charges consumers in advance for credit repair services, which is illegal. The complaint alleges that consumers are billed $99 upfront and then pay a recurring monthly fee of up to $89 for inefficient services. The company also routinely fails to provide consumers with important information required by law, including refund and cancellation policies.
  • Exploitation of a pyramid scheme: The Company also encourages consumers to become “agents” of financial education services themselves, selling the Company’s services to other consumers. Agents make outlandish tax claims that consumers can earn more than $1,000 a week from the program and earn bonuses in the tens of thousands of dollars. The complaint also alleges that consumers have to pay hundreds of dollars to join the program and pay for the company’s bogus credit repair services every month, even though they don’t need them. The system’s compensation structure has the characteristics of a pyramid scheme, with increasing levels of compensation and titles based on the number of members recruited, and an emphasis on the importance of recruiting new members. Few, if any, consumers earn the promised income, and many consumers lose money as agents.

The complaint alleges that the company also unlawfully used false information in the process of selling its credit repair and investment opportunities to acquire banking and other financial information about consumers.

The Commission’s vote allowing staff to file the complaint and request for a temporary injunction was 4-0. The lawsuit was filed in the U.S. District Court for the Eastern District of Michigan.

The FTC appreciates the assistance of the Georgia Attorney General’s Office Consumer Protection Division in presenting this case.

REMARK: The Commission files a complaint when it has “reason to believe” that the named defendants are violating or are about to violate the law and it appears to the Commission that a proceeding is in the public interest. The case will be decided by the court.


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