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September 5, 2007
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Chief Executive Officers of All National Banks; All State Banking Authorities; Chairman, Board of Governors of the Federal Reserve System; Chairman, Federal Deposit Insurance Corporation; Director, Office of Thrift Supervision; Conference of State Bank Supervisors; Deputy Comptrollers (districts); Assistant Deputy Comptrollers; District Counsel; and All Examining Personnel
The Office of the Comptroller of the Currency (OCC) is aware that the volume and variety of fraudulent schemes supposedly designed to "eliminate" debt is increasing. These schemes are being promoted via the Internet and in seminars throughout the United States. The fraudulent schemes are being marketed to ordinary people, not just the wealthy or sophisticated, including borrowers who are current on their payments and those approaching foreclosure.
The persons perpetrating the fraudulent schemes claim that they can eliminate borrowers’ various types of debt, including mortgages, credit card balances (including balances on cards issued by nonbank companies), student loans, auto loans, and small business loans. The variations on these schemes are endless.
A recent variation includes the fraudulent use of the OCC’s 3-page Customer Complaint Form (form). The form is included in the package of documents provided to the victim, falsely adding another pretense of legitimacy to the worthless program. The victim is told to sign only the third page of the form, not to date it or complete any other information requested on the form. The date, customer, and financial institution information will be completed by the perpetrators. The form is subsequently completed and filed with the OCC falsely stating that the financial institution has acted improperly with regard to the victim’s account.
These schemes are designed to defraud victims of an up-front fee, which typically ranges from $400 to $7,500. As a result of using a fraudulent scheme, victims could lose money and property, and damage their credit record. In addition, the creditor may take additional legal action against a borrower to resolve a fraudulent attempt to eliminate a borrower’s debt.
A second, extremely harmful, potential result of participating in any of these illegal schemes is the theft of a victim’s identity . Based upon the information provided to the perpetrators in a scheme, they may be able to steal a person’s identity and run up substantial new debts before the victim is aware of the theft. Resolving identity theft issues is an extremely difficult and time-consuming matter.
The following are sample variations of the fraudulent processes used to fool borrowers into paying money to "eliminate" debt:
These schemes have no substance in law or finance. No one can eliminate an obligation to pay a debt, simply by paying someone a small fee, relative to the debt to be eliminated.
In the guise of educating borrowers, these schemes provide inaccurate or distorted information about applicable laws and finance. Some examples of inaccurate information from these schemes include the following:
Consumers who receive counterfeit or fictitious items and associated material should file complaints with the following agencies, as appropriate:
Additional information concerning this matter that should be brought to the attention of the Office of the Comptroller of the Currency (OCC) may be forwarded to
Office of the Comptroller of the Currency
Special Supervision Division
400 7th St. SW, Suite 3E-218; MS 8E-12
Washington, DC 20219
Phone: (202) 649-6450
Fax: (571) 293-4925
For additional information regarding other types of financial fraud, please visit the OCC's anti-fraud resources page.
Richard C. Stearns
Director for Enforcement & Compliance