Over the past year, our economy has been buffeted by a serious spike in mortgage fraud that has fueled loan defaults and home foreclosures at alarming rates. But only recently have authorities possibly connected the increase in fraud to a booming online community that specializes in selling extra “credit” to consumers. According to a recent article in the New York Times, an increasing number of websites are offering some shady services to improve credit scores. Some of them offer to attach a consumer’s name to another’s credit card account, essentially leasing out the account-holder’s credit score in a practice called “piggybacking.” Some others provide false pay stubs from bogus companies to act as proof of employment, and one apparently even offers a well-stocked bank account that people can rent temporarily.
The legality of these websites still seems a bit unclear, and authorities are just starting to pursue potential legal actions. But their presence seems to be increasing on the Web, and they are undoubtedly making it easier for consumers to defraud lenders.
The Fair Isaac Corporation, developers of the FICO credit score, has announced that it is going to terminate the practice of piggybacking. According to the Times article, people who are added to another’s credit line as of September of this year will no longer inherit the credit history of the cardholder as well. Hopefully, this will help stop the upward trend of mortgage fraud, but more will have to be done to curb the problem completely.
But at least we are aware of these online services now. Consumers should know that anyone who offers to add other people to their credit line is essentially inviting fraud or identity theft. Also, consumers alone will be held responsible for fraudulent loans, regardless of the legality of these shady websites.
We usually think of fraud and identity theft in more personal terms, but this type of mortgage fraud is reaching beyond the normal scope of the problem, and it’s affecting our entire economy. If the trend continues, we will all eventually become the victims of this type of fraud.