The FTC Shuts Down a Massive Consumer Fraud and Pyramid Scheme

Mark Hake

The Federal Trade Commission (FTC) announced on May 31 that it shut down a "wide-ranging operation" that scammed consumers out of more than $213 million.

The operation, called Financial Education Services, "a sprawling bogus credit repair scheme" was temporarily shut down by a federal court. This was a result of a complaint filed by the FTC and included its owners, Parimal Naik, Michael Toloff, Christopher Toloff, and Gerald Thompson.

The FTC’s complaint alleges that Financial Education Services preys on consumers with low credit scores. It lures them in with the false promise of an easy fix and then recruits them to join a pyramid scheme selling the same worthless credit repair services to others.

“These defendants collected millions in junk fees as part of a pyramid scheme that peddled phony credit repair products,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “We are pleased that the court shut down this operation and froze its assets, and we will continue to pursue firms that prey on families’ economic pain.”

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.

Crunchbase indicates that Parimal Naik is the CEO and Co-founder of the company, based in Michigan.

The FTC said there was an associated hard sell pyramid scheme. The scheme consisted of selling 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.

**********************

Mark R. Hake, CFA writes articles at InvestorPlace.com, Barchart.com, Medium.com, and Newsbreak.com as well as a Beehiiv free newsletter on stocks and cryptos.

Comments / 18

Published by

Mark Hake is a financial analyst, investor, and Chartered Financial Analyst (CFA). He writes about US and foreign stocks as well as cryptos, hedge funds, and private equity. He previously ran his own hedge fund, investment research firm, and acted as CFO for a fintech startup. He focuses on finding value, arbitrage, and hidden asset opportunities.

Phoenix, AZ
3201 followers

More from Mark Hake

Comments / 0