The current economic downturn has hurt many people and today more than forty million Americans have credit scores of 620 or lower.
At the same time, people's individual credit reports are being used for more and more purposes: by lenders, employers, landlords, and so on.
Therefore, having bad credit can be a serious problem for a lot of people which sometimes leads them to shop around for various quick fixes to their credit problems.
Unfortunately, there are no legitimate quick fixes when it comes to credit restoration.
Like it or not, all legitimate credit restoration methods take time.
However, there is one scam that at least seems as though it works for a while but also happens to be brazenly illegal.
These are the scams based on a technique known as file segregation and common sold as "new credit identity" options.
The basic idea is that the person selling this scam will advise the dupe to go to the IRS website and obtain an Employer Identification Number (EIN), which is a fairly simple process that anyone can do.
These numbers are exclusively used for businesses or other entities that employ people, but they just happen to be unique nine digit numbers, like a Social Security Number (SSN).
The scam operator then instructs the dupe to use the EIN instead of their legitimate SSN, which effectively creates a "new credit identity" since there is no existing credit history associated with the new EIN.
Not surprisingly, this is a completely illegal action and can not only result in extensive financial penalties from the IRS and other government agencies, but also in serious criminal prosecution and jail time.
It is illegal for individuals to even obtain an EIN for personal use, it is illegal to put an EIN as a substitute for your personal SSN on a loan or credit application, and it is illegal to transmit any document wherein an EIN is being used as a false SSN through the mail or electronically (wire fraud).
Further, the scammers are always careful to ensure that the dupes do all their own work: the dupe gets the EIN, the dupe uses it; and the dupe transmits it.
All the scammer does is provide the instructions, which means when it is discovered (and it usually is since EINs are not SSNs) it is the dupe that is solely responsible for the illegal activity.
The scammer just showed how it is done and can always turn around and say that this information was just for "entertainment purposes".
It is the dupe that pays the price and faces the consequences, not the scammer.