Consumer Payment Card News

File Segregation Crackdown

Scam artists are making such claims as BRAND NEW CREDIT FILE IN 30 DAYS, appealing to unsuspecting consumers who are trying to repair their bad credit. What the consumers dont know, is that these scammers are lying to them, taking their money, and telling them to commit a felony.
File segregation is the practice of substituting Federally-issued, nine-digit employee identification numbers or taxpayer identification numbers for social security numbers. The bogus firms are selling the instructions to consumers to illegally make this substitution, then use the new numbers to build new credit profiles that will allow them to get credit they may have been denied on their real credit histories.

Making such claims on the Internet, in magazines, newspapers and other media as: Its 100% LEGAL …, Its Not Only Legal, Its Your Right, Erase Bad Credit, Anyone Can Have A New Credit File Instantly Overnight, and Start All Over Again With Brand New Credit, the companies offer to show consumers how to develop new credit identities through file segregation. For a fee ranging from $29.95 to $200, they frequently give advice on how to develop new credit profiles by getting Federal ID numbers, a new drivers license, or by using a false social security number. This procedure is clearly illegal, and the IRS and U.S. Attorneys General are vigorously prosecuting these cases.

In a massive crackdown on file segregation, the Federal Trade Commission (FTC) and the National Association of Attorneys General (NAAG) announced that 17 law enforcement agencies have filed 43 law enforcement actions against defendants who claim to help consumers build new credit histories. This announcement coincides with the National Consumer Protection Week, a nationwide consumer education and law enforcement initiative sponsored by a broad coalition of public and private consumer protection advocates. These advocacy groups include the FTC, NAAG, U.S. Postal Inspection Service, National Association of Consumer Agency Administrators, National Consumers League, and the American Association of Retired Persons. The theme of the week, Credit Fraud — Know The Rules, Use The Tools,” is intended to raise awareness about credit scams and teach consumers how to protect themselves.

Cases were announced by the Attorneys General of Arizona, California, Connecticut, Delaware, Illinois, Kentucky, Minnesota, Missouri, Nevada, North Carolina, Ohio, Oklahoma, Oregon and Pennsylvania. The Treasury Inspector General for Tax Administration (formerly the IRS Internal Security Division) announced that criminal search warrants had been executed in an additional five cases. Other law enforcement agencies in New Jersey, Massachusetts, Michigan, Tennessee and Wisconsin are also involved in this joint effort.

The FTC, NAAG and the other advocacy groups want you to know that there is no legal way for consumers to alter their credit identification to conceal adverse information that is accurate and timely.

Copies of the complaints and consumer education materials about credit fraud are available from the FTCs Web site,, by writing them at the FTC Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580, or by calling them at 202-FTC-HELP (382-4357) or TDD for the hearing impaired at 202-326-2502. The FTC also provides a recording for news as it is announced at 202-326-2710.

You can obtain your Attorney Generals phone number by contacting the National Association of Attorneys General through their Web site at

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