Operators Of Phony Rental Credit Check Scheme Must Pay $762K To Feds

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In January, federal regulators announced they had put a stop to an apartment rental scam in which homes (that may not exist) are listed online with the sole purpose of tricking prospective renters into paying for “credit checks” that will never be done. Now, the operators of the scheme must pay $762,000 to put an end to the Federal Trade Commission’s allegations. 

The FTC announced today that it received a court order [PDF] against Danny Pierce and Andrew Lloyd for their part in operating an alleged scheme run by Credit Bureau Center LLC that targeted consumers looking to rent property.

The Alleged Scheme

According to the Commission’s complaint [PDF], since Jan. 2014 Credit Bureau Center — previously known as MyScore LLC, and doing business as eFreeScore.com, CreditUpdates.com, and FreeCreditNation.com — deceptively advertised, marketed, promoted, and sold credit monitoring services to consumers.

When prospective customers responded to the ads, the companies would allegedly impersonate property owners and send emails offering tours if the consumers would first obtain their credit reports and scores.

To do so, the FTC claims, the companies sent the potential renters to websites operated by the defendants. The sites claimed to provide “free” credit reports and scores.

As an extra incentive, the email often stated that, if the consumer’s credit score exceeded a certain level, such as 650, the landlord would waive the security deposit.

However, the complaint alleged that the sites deceived consumers into signing up for a negative option seven-day trial of a credit monitoring service.

The FTC claimed that nowhere on the webpage was it disclosed that consumers were enrolling in an unrelated credit monitoring program. Once the free trial was over the consumers were charged $29.94 each month for the service.

In many cases, people did not realize they had been enrolled until they noticed unexpected charges on their bank or credit card statements, sometimes after several billing cycles.

The complaint also alleged that consumers who obtained their credit reports and scores never got the promised property tours, and that their emails to the purported property owner to arrange the tours went unanswered.

In all, the FTC alleged that the defendants violated the FTC Act, the Restore Online Shoppers’ Confidence Act, the Fair Credit Reporting Act, and the Free Reports Rule, which requires that consumers be informed of their right to obtain free credit reports.

Paying Up

Under the order, the duo was ordered to pay a $6.8 million judgment. However, that all but $762,000 of that amount will be suspended. Instead, Pierce will pay $117,000, while Lloyd will pay $645,000.

In addition to the monetary judgment, Pierce and Lloyd are prohibited from misrepresenting material facts about any product or service, and must monitor their affiliate marketers in the future.

Additionally, they are prohibited from profiting from consumers’ personal information obtained as part of the scheme and failing to dispose of it properly.

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