Get rid of bad credit rating for $49? Nightmare may follow, officials say

February 12, 1994|By Consella A. Lee | Consella A. Lee,Sun Staff Writer

Start Over. Brand New Credit File.

The message, stenciled on wooden signs tacked to trees along major thoroughfares in Baltimore and suburban counties, offers encouraging words for credit junkies looking to leave their bad credit ratings behind.

But the man selling credit salvation is in fact offering an altered identification that conveniently erases many connections to old credit problems.

Officials of government agencies in Maryland and many other states say the practice skirts the edges of fraud and perjury. The practice remains legal in Maryland, but at least two other states have outlawed it, and a Maryland lawmaker is drafting legislation to close the loopholes that allow it here.

"He's selling you a road map to creating an alias, if you will," said Steve Lovejoy, assistant attorney general in the Maryland Office of the Commissioner of Consumer Credit. "I think the consumer is in for a nightmare if they try to do this."

The man peddling the plan in Maryland identifies himself as Robert Getek. The address listed for his business is a mail-receiving service in Severna Park. Mr. Getek did not respond to notes left in his post office box requesting interviews and repeated phone calls.

The strategy Mr. Getek espouses, described in a recorded telephone message that offers the plan for $49 C.O.D., involves hiding poor credit histories from future creditors by altering information about oneself. It suggests alternatives to revealing one's Social Security number and advises consumers to change their telephone number, withhold their birth date and have mail sent to a different address -- perhaps that of a trusted friend.

In the plan, written for a nationwide audience and not tailored to Maryland, Mr. Getek assures his customers that everything he suggests is legal. He offers a money-back guarantee to anyone unable to obtain the employee identification number (EIN) that is the key to starting a new credit history.

He even offers a phone number for more information. The telephone exchange is in Capitol Heights, but the number has been disconnected.

Law enforcement officials and people in the credit industry say they would like to see the Getek operation and others like it outlawed across the country.

"Let me say bluntly that for our industry, we think this is fraudulent activity," said Stuart K. Pratt, director of state government relations for Washington-based Associated Credit Bureaus Inc. "We're all paying a higher price if we're paying for consumers who default on a debt and who might get more credit and default again," he said.

For $49, Mr. Getek's customers get 19 photocopied pages, including IRS forms, excerpts from the Federal Fair Credit Reporting Act, information on the Privacy Act of 1974 and four pages of dos and don'ts.

Consumers also get this disclaimer: "Publisher is in no way offering legal or accounting advice. Readers are encouraged to seek legal advice concerning their individual situations."

How it works

Here's how the credit-clearing method, known as credit file segregation, works:

People with poor credit histories are told to apply to an IRS center in their area for an employee identification number. Consumers are instructed to use the EIN in lieu of their Social Security number on future credit forms.

Essentially Social Security numbers for businesses, EINs can be obtained legally by individuals, said Domenic J. LaPonzina, chief spokesman for the Baltimore IRS office. But problems arise when someone lies about why he or she wants one of the numbers, which never were intended to help people clean up their poor credit records, Mr. LaPonzina said.

The kit, called the "New Credit File Report," contains advice ranging from never divulging the month and day you were born to never listing credit references or seeking credit at establishments where you have applied before.

Mr. Getek tells his customers to use a new address -- a business address, perhaps, or that of a close friend -- and new phone number. He tells them to get a driver's license listing that address.

The goal is to obliterate any links that might cause your old credit file to become merged with your new one. Computers at credit-reporting bureaus track consumers by such data as Social Security number, address and date of birth.

Should a potential creditor ask for your Social Security number, the kit advises, "simply refuse and apply for credit somewhere else."

'Circumventing the system'

Signs advertising Mr. Getek's kit started appearing about thre months ago in Baltimore City and in Anne Arundel and Baltimore counties along Ritchie Highway, U.S. 40, Edmondson Avenue and Security Boulevard.

"What apparently this fellow is doing is going around Robin Hood's barn through the back door," said Henry Bahne, assistant executive director of Consumer Credit Counseling Services of Maryland, a private firm that works with creditors to try to get people out of debt. "In other words, he's circumventing the system."

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