The Federal Trade Commission (FTC) said on Tuesday it will send over $10.9 million in redress payments to consumers defrauded in a nationwide credit repair operation that the agency portrayed as a pyramid scheme.
The refunds will be sent out to 443,048 individuals. These individuals paid for services from entities operating under names such as Financial Education Services (FES), United Wealth Education, United Credit Education Services, and Youth Financial Literacy Foundation. The redress averages out to about $25 per individual.
The FTC reached settlements with the companies and their owners in 2024 after a 2022 lawsuit alleged they misled consumers by promising easy credit score improvements.
The scheme went after people with low credit scores, and revolved around false claims that the services could swiftly improve credit.
The operation then recruited participants to sell identical credit repair packages to others, resulting in a pyramid structure where most participants lost money as the organizers profited, according to the FTC’s complaint. The agency said the fraudulent practices left consumers millions out of pocket.
The current refunds come from funds secured in the 2024 settlements, which also forced the defendants to stop the deceptive practices.
Checks will be mailed to eligible consumers, who should deposit them within 90 days of receipt. The agency advises consumers that it never requests people to pay money or share account information to receive a refund payment.
“These companies promised to clean up people’s credit but failed to deliver. Meanwhile, honest businesses make money selling products and services, not by recruiting, and the drive to recruit, especially when coupled with inflated income claims, is the hallmark of an illegal pyramid,” Samuel Levine, director of the FTC’s Bureau of Consumer Protection said about the scheme in 2024. “The FTC is committed to stopping deceptive credit repair tactics and shutting down illegal pyramid schemes that prey on struggling consumers.”
Levine in 2022 said the defendants—Parimal Naik, Michael Toloff, Christopher Toloff, and Gerald Thompson—collected millions in junk fees as part of a pyramid scheme that peddled phony credit repair products.
“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,” he said.
The commission’s interactive refund dashboards provide state-by-state breakdowns of distributions in various cases.
In 2024, FTC enforcement actions resulted in more than $339 million in total refunds to consumers nationwide.
Victims of the scheme who have questions about their payment should contact the refund administrator, Analytics, at 833-699-7995 or by email at [email protected].
