Bad-Credit Con Game Is Targeted

State and U.S. authorities said Tuesday that they have moved to shut down a network of alleged con artists who tricked consumers into buying illicit remedies for bad credit.

As part of the scam, con artists would solicit consumers with poor credit histories to buy instructions on how to establish new credit records, authorities said.

The instructions sold for up to $399 on the promise that they contained legal secrets for clearing up blemished credit records. But authorities say they offered advice on how to break the law by switching Social Security numbers, turning hapless consumers into felons.

Lawyers for the Federal Trade Commission and attorneys general from 14 states announced the filing of 38 civil actions aimed at crippling the scams. U.S. Treasury officials said they had served search warrants in five criminal cases.

“These scams target very vulnerable consumers,” said Jodie Bernstein, director of the FTC’s Bureau of Consumer Protection. “They prey on people . . . who may be desperate to develop a clean credit history so they can get a loan, get a job or buy a car.”

In addition to the civil actions, 58 people have been indicted or entered guilty pleas on charges of cheating creditors, Treasury Department officials said. Victims who unwittingly filed false reports will not be prosecuted, they said.

The con artists would typically advise consumers to apply for a federal employee identification number--usually reserved for businesses to report financial data. Consumers were then advised to use it as their Social Security number on loan documents and credit forms. That practice is a felony.

One of the FTC’s targets was Ralph L. Mitchell Jr., who marketed his services on several Web sites. His $32.95 book, “Credit Secrets,” advises consumers to “adjust” their Social Security numbers according to a formula, the FTC said.

Mitchell, whose Web sites list a Riverside telephone number, also markets products such as Grobust, which he touts as “the herbal alternative to breast enlargement.”

A federal judge issued an order Monday freezing Mitchell’s assets, the FTC said. Mitchell did not return phone calls Tuesday.