Are Tradelines Legal?

Authorized user tradelines

Are tradelines legal?

Yes. Being added as an authorized user on someone else’s credit card is lawful and routine, and paying a seller to arrange it is lawful too. The Federal Trade Commission has never declared the practice itself unlawful. What it has done is shut down two sellers, in 2020 and 2022, for how they sold it: promised score gains, fees taken before anything was delivered, false claims about legality and refunds, and fabricated disputes. Those cases are the whole enforcement record, and they are the test any seller, including Pinnacle, should be held to.

Why authorized user accounts count at all

Regulation B, which implements the Equal Credit Opportunity Act, requires a creditor that considers credit history to consider “the credit history, when available, of accounts designated as accounts that the applicant and the applicant’s spouse are permitted to use or for which both are contractually liable” (12 CFR 1002.6(b)(6)(i)). The rule exists so that a spouse who shared accounts is not treated as having no history. Credit bureaus record an authorized user relationship but not whether the authorized user is a spouse, so every authorized user account flows into a file the same way, and scoring models see the account’s open date, limit, balance and payment history.

That is the mechanism a paid seat relies on. FICO states that recent versions of its score give authorized user accounts less impact than primary accounts, while older versions treat them the same as the primary holder’s; VantageScore has not published how its models treat them. None of that makes the account unlawful. It makes the effect smaller and less predictable, which is the subject of a separate article.

What the FTC enforced against, case by case

FTC v. BoostMyScore, District of Colorado, 2020

The FTC filed against BoostMyScore LLC, BMS Inc. and their owner in March 2020 (No. 1:20-cv-00641) and announced a settlement the same week. The complaint alleged that the company advertised that consumers’ credit scores “would increase by anywhere from 100 to 120 points over two to six weeks,” promised that piggybacking would lead to mortgages and other new credit, charged between $325 and $4,000 before delivering anything, and misrepresented the service as legal. The FTC charged violations of the FTC Act, the Credit Repair Organizations Act and the Telemarketing Sales Rule.

The order banned the defendants from selling access to another consumer’s credit as an authorized user, from collecting advance fees for credit repair, from misrepresenting a service as legal, and from misrepresenting refund terms. It carried a judgment of $6,630,678, suspended after payment of $64,863 because the defendants could not pay.

FTC v. Rando, Middle District of Florida, 2022

In May 2022 the FTC obtained a temporary restraining order against Michael and Valerie Rando and their companies, which had operated as Wholesale Tradelines from 2019 and as The Credit Game from 2020. The complaint alleged that they charged consumers up front, often thousands of dollars, without the disclosures CROA requires; sold piggybacking with false claims about legality, effectiveness and refunds; filed thousands of false identity theft reports with the FTC on customers’ behalf to get accurate information removed; pitched customers a business opportunity to run their own credit repair scheme; and had bought their tradeline database from the BoostMyScore defendants while knowing those defendants were under investigation.

In December 2022 the court entered orders permanently banning the Randos from operating or assisting any credit repair service of any kind, with a judgment of $18,875,613, partly suspended, and a court-appointed receiver liquidating real estate, vehicles and accounts for consumer refunds. The FTC later sent more than $3.5 million back to consumers.

The four behaviours the orders punished

Read together, the two cases turn on the same four things. Each is a question a buyer can put to any seller.

  1. A score promise. BoostMyScore promised 100 to 120 points in weeks. A lawful seller promises a seat with a stated term and states plainly that no score outcome is promised.
  2. Money before performance, for credit repair. CROA forbids a credit repair organization from charging “for the performance of any service which the credit repair organization has agreed to perform for any consumer before such service is fully performed” (15 U.S.C. 1679b(b)). Both defendants took thousands up front for a promise to improve credit.
  3. False claims about legality or refunds. Both defendants told buyers the service was legal in terms the FTC found misleading, and The Credit Game misrepresented refunds. A lawful seller states its refund terms in writing and does not oversell the law.
  4. Fabricated disputes. The Credit Game filed false identity theft reports to strip accurate items. A tradeline seller has no business disputing anything on a buyer’s file.

Where CROA draws the line

CROA covers any person who sells a service “for the express or implied purpose of improving any consumer’s credit record, credit history, or credit rating” in return for payment (15 U.S.C. 1679a(3)). A seller that markets a seat as a way to raise your score is making that promise, and CROA’s rules follow: no advance fees, a written contract, a cancellation right, and no “untrue or misleading representation of the services” (15 U.S.C. 1679b(a)(3)). That is the box BoostMyScore and The Credit Game were in.

A seat sold as a defined product, a fixed term on a specific account with no representation about your score, is a different transaction. Whether any particular seller sits inside or outside CROA turns on what it says and charges for, not on what it calls itself. Pinnacle is a credit repair organization for its FCRA dispute work and treats its tradeline seats as a separate service with no score representation, a stated term and written refund terms. That description is on the disclosures block of the tradelines page and in the refund policy, where a reader can check it.

The buyer’s own exposure: what you tell a lender

Nothing in the enforcement record is against buyers. A buyer’s risk is different and simpler: misrepresentation to a lender. The account is reported as an authorized user account and an underwriter can see that. Buying the seat is not a misstatement. Describing the account as your own on an application, or answering a lender’s question about it untruthfully, is, and a false statement to a federally insured lender is a federal offense. Answer questions about the account truthfully and let the underwriter weigh it.

Fannie Mae’s mortgage fraud guidance lists credit reports where “all tradelines opened at the same time” and “authorized user accounts have superior payment histories” among patterns an underwriter should question. One seasoned account on a file that otherwise reports normally does not match that pattern. Several new ones at once does.

Questions people ask

Is credit piggybacking illegal?

No. Adding an authorized user is a normal card feature, and paying a seller to arrange it is not prohibited by any federal statute. The FTC’s two cases against piggybacking sellers were about score promises, advance fees, false claims and fabricated disputes, not about the authorized user relationship.

Why did the FTC shut down BoostMyScore?

Because it promised 100 to 120 point score increases within weeks, charged $325 to $4,000 before delivering, and misrepresented the service as legal, which the FTC charged as violations of the FTC Act, the Credit Repair Organizations Act and the Telemarketing Sales Rule. The 2020 order banned it from selling authorized user access and from advance fees.

Can I get in trouble for buying a tradeline?

The enforcement record is against sellers. A buyer’s exposure comes from misrepresenting the account to a lender. Do not describe an authorized user account as your own, and answer a lender’s questions about it truthfully.

Is a tradeline the same as credit repair?

No. Credit repair disputes inaccurate or unverifiable information on your own accounts under the Fair Credit Reporting Act. A tradeline adds someone else’s account to your file for a term. They are different services under different laws, and Pinnacle sells them separately, never bundled.

Sources

  • FTC, “Credit Repair Company Settles FTC Charges It Deceived Consumers By Telling Them ‘Piggybacking’ on Others’ Credit Could Boost Scores,” 9 March 2020: ftc.gov
  • FTC complaint, FTC v. BoostMyScore LLC et al., D. Colo. No. 1:20-cv-00641, filed 6 March 2020: ftc.gov (PDF)
  • FTC, “FTC Acts to Shut Down ‘The Credit Game’ for Running a Bogus Credit Repair Scheme that Fleeced Consumers,” May 2022: ftc.gov
  • FTC, “FTC Action Leads to Permanent Ban for Scammers Behind ‘The Credit Game’ Credit Repair Scheme,” 15 December 2022: ftc.gov
  • Credit Repair Organizations Act, 15 U.S.C. 1679a (definitions) and 1679b (prohibited practices): 1679a, 1679b
  • Regulation B, 12 CFR 1002.6(b)(6): law.cornell.edu

This article describes public enforcement records and statutes. It is not legal advice. Pinnacle’s own terms for authorized user seats are stated on the tradelines page, the commitments page and the refund policy.