Legal Theory

Web Schemes to Buy Better Credit Legal?

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Web-based companies that help consumers improve their credit–for a fee–are clearly skirting the law. But are they violating it?

Perhaps not, as least as far as some of the methods being used are concerned, says a New York Times article. Purchasing the right to “piggyback” on the accounts of a stranger with a stellar credit report, for instance, doesn’t appear to be illegal–although those renting out their good credit are inviting identity theft, the paper writes.

Similarly, while it’s illegal for a loan applicant to misrepresent his or her finances to a potential lender, selling fake pay statements for “entertainment” may not cross the line. Apparently, a rapidly increasing number of Internet companies are offering such services, and they may be at least partially responsible for a big spike in the number of fraudulent mortgage applications in recent years, officials say.

Government regulators and industry leaders concerned about mortgage fraud and are seeking to get a handle on the situation. But ironically their efforts to crack down on overly aggressive lending practices and require more documentation may “actually increase demand for some of the services these Web sites offer,” the Times writes.

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