CROA case shows why piggybacking isn’t the answer for consumers shouldering bad credit

The practice is called piggybacking, but it’s not child’s play. It’s where a person with iffy credit pays a credit repair company to be listed as an authorized user on the account of someone with good credit – even though they don’t actually have access. The idea is that the person with bad credit can inflate their own credit score and get the money-saving benefits of better credit by “piggybacking” on the credit of a stranger. That’s how a Denver-based business pitched its services to cash-strapped consumers. But the FTC says the defendants couldn’t back up their score improvement claims and engaged in a host of illegal practices that violated the FTC Act, the Credit Repair Organizations Act (CROA), and the Telemarketing Sales Rule.

BoostMyScore and CEO William O. Airy claimed to offer consumers “the amazing benefit” of having another person’s credit “‘copied and pasted’ on to your credit report,” giving the buyer “the biggest possible FICO® score boost in less than 60 days; and it’s guaranteed!” Here’s how the defendants described their services, for which they charged consumer between $325 to $4,000 – or even more:

HOW TO HACK YOUR CREDIT SCORE. What is a tradeline? Steroids straight into the heart of your credit score... Adding a high quality “tradeline” is the most effective way to quickly boost your credit score. Through a process called “tradeline renting” or “credit piggybacking,” you can overcome your credit woes.

Online and in radio ads, the defendants promised consumers concrete benefits – for example, qualifying for a mortgage. According to one promotional piece, “ . . . many of our customers realize a jump of about 120 points in as little as two weeks. What would a credit score increase of that size mean for you? If you are like most people, that could be the difference between having your mortgage application approved or not.”

The complaint alleges the defendants also advised those strangers with good credit on how to conceal what was going on:

While speaking with call center employees. . . [i]f someone is being . . . overly inquisitive, and you feel they may be trying to uncover your motive of earning an income by renting out the AU [Authorized User] spots on your cards, you can simply tell them you have to run and will call them back later to complete your tasks. Then immediately hang up, without waiting for a response, because doing so usually closes out your account on their computer screen, reducing any chance they had of transferring you to another department or manager tasked with closing credit card accounts they assume are being utilized in this way.

You’ll want to read the complaint for details of the allegations, but the FTC says the defendants violated the FTC Act by deceptively claiming that their services would significantly improve consumers’ credit scores and help them get mortgages. The lawsuit also alleges the defendants violated the Credit Repair Organizations Act by the misleading use of tradelines and by engaging in a course of business that results in fraud or deception. The FTC says they also violated CROA and the Telemarketing Sales Rule by making misrepresentations about credit repair service and by charging illegal advance fees.

The settlement prohibits the defendants from marketing credit repair services that attempt to add an authorized user to anyone’s credit unless that person has actual access. In addition to other provisions to protect consumers in the future, the proposed order prohibits misrepresentations about the legality of credit piggybacking. Most of the proposed $6.6 million judgment would be suspended due to the defendants’ financial condition.

What’s the message for other marketers? Piggybacking may be cute for kids, but when it comes to credit, it’s a cynical tactic likely to draw the attention of law enforcers. Furthermore, when offering credit repair services, asking for so much as one thin dime up front will land you in legal hot water.