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• Pending Government Action:

  Government Action: BBB reports on known government actions involving business’ marketplace conduct:

  Federal Trade Commission v. CM Rent, Inc
  

  The following describes a pending government action that has been formally brought by a government agency but has not yet been resolved. We are providing a summary of the governments allegations, which have not yet been proven.

  On May 23, 2022, in the United States District Court for the Eastern District of Michigan, the Federal Trade Commission filed a complaint for permanent injunction, monetary relief, and other relief against Financial Education Services, Inc., a Michigan corporation, United Wealth Services, Inc., a Michigan corporation, VR-Tech, LLC, a Michigan limited liability company, VR-Tech Mgt, LLC, a Michigan limited liability company, CM Rent Inc., a Colorado corporation, Youth Financial Literacy Foundation, a Michigan nonprofit corporation, Parimal Naik, in his individual and corporate capacity, Michael Toloff, in his individual and corporate capacity, Christopher Toloff, in his individual and corporate capacity, and Gerald Thompson, in his individual and corporate capacity, hereinafter referred to as “Defendants”.

  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 scamming consumers out of more than $213 million.

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

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

  The FTC’s investigation found that the company’s scheme combines charging consumers for these worthless credit repair services with a hard sell to join a pyramid scheme that consists of selling 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:

  • Deceived consumers about credit repair: Financial Education Services uses social media, telemarketing, bogus “testimonials, and a network of sales agents across the country to deceive consumers, falsely promising in English and Spanish that they can remove negative information from credit reports and increase credit scores. The complaint alleges that the company has often merely sent consumers form letters to send to credit bureaus that did not result in the promised changes. 
  • Sold 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 many credit bureaus don’t accept this kind of information directly from consumers.
  • Charged consumers upfront for credit repair: The company charges consumers upfront for credit repair services, which is illegal. The complaint alleges that consumers are charged $99 upfront, and then pay a recurring monthly fee as high as $89 for the ineffective services. The company also regularly fails to provide consumers important information required by law, including refund and cancellation policies. 
  • Operated a pyramid scheme: The company also encourages consumers to become Financial Education Services “agents” themselves, selling the company’s services to other consumers. Agents make outlandish income claims that consumers can make more than $1,000 weekly in the scheme and earn bonuses of tens of thousands of dollars. The complaint also alleges that consumers must pay hundreds of dollars to join the scheme and pay for the company’s bogus credit repair services each month, even if they don’t need them. The compensation structure for the scheme has hallmarks 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 make the income promised, and many consumers lose money as agents. 

  For more information, please visit ReportFraud.ftc.gov or call 877-382-4357.

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