Credit Fixing Scheme Gains Popularity

Could Mean You're Making Gifts Instead Of Loans
The Federal Bureau of Investigation (FBI) reports that Employer Identification Numbers (EINs) are being used to defraud many financial institutions in fraudulent credit history schemes throughout the United States.

EINs are the identifying numbers that the Internal Revenue Service (IRS) assigns to business taxpayers. EINs were first issued in 1961 and identify corporations, partnerships, non-profit associations, trusts, sole proprietors, and similar non-individual entities. It's easy to get an EIN. You can apply by telephone or by mailing an SS-4 application to an IRS Service Center.

The IRS issued 2.3 million EINs in 1993.

Fraud Discovered
In January, 1995, the FBI and the U.S. Secret Service became aware of fraud schemes using EINs on loan applications in place of a Social Security Account Number (SSAN). An EIN has the same number of digits as a SSAN, but is hyphenated differently.

If a person has a bad credit history, or has declared bankruptcy, it is impossible to borrow money, obtain credit cards, or buy anything on credit. Some business operations advertise they can "fix" bad credit. One is called 'Second Chance Enterprise', from which it is possible to buy "credit repair packages".

The method of operation requires a person who wants a "new" credit history to obtain an EIN and then make application for credit at a business such as an auto dealership which will make an inquiry to a credit reporting company. The inquiry would be in the individual's true name, but using an EIN instead of a SSAN, and an address other than the one associated with their previous credit history.

This "credit separation" scheme enables the individual to be entered on a system such as Equifax Credit Information Services and indicates to subsequent inquiring businesses that there is no record (good or bad).

This scheme has been used at auto dealerships which submit loan applications to financial institutions via fax machine. These loans are often scored by the lending institution with no actual verification of the data. Home mortgages have also been obtained from federally insured institutions using the same methods. The potential number of secondary financing sources and retail outlet victims is unlimited.

"Where did you get your number?"

If possible, ask the owner of the number where it was issued. If the beginning of the number doesn't match the District Office in the area, verify further. (See the table on page two.) In many of the reported schemes, the number did not match the geographic area of the individual or, in some cases, the "business" represented.

EIN Prefix Code & District Office Table
01 Augusta, Maine
02 Portsmouth, New Hampshire
03 Burlington, Vermont
04 Boston, Massachusetts
05 Providence, Rhode Island
06 Hartford, Connecticut
11 Brooklyn, New York
13 Manhattan, New York
14 Albany, New York
15 Syracuse, New York
16 Buffalo, New York
21 Camden, New Jersey
22 Newark, New Jersey
23 Philadelphia, Pennsylvania
24 Scranton, Pennsylvania
25 Pittsburgh,Pennsylvania
31 Cincinnati, Ohio
33 Laguna Niguel, California
34 Cleveland, Ohio
35 Indianapolis, Indiana
36 Chicago, Illinois
37 Springfield, Illinois
38 Detroit, Michigan
39 Milwaukee, Wisconsin
41 St. Paul, Minnesota
42 Des Moines, Iowa
43 St. Louis, Missouri
44 Kansas City, Missouri
45Fargo, North Dakota
46 Aberdeen, South Dakota
47 Omaha, Nebraska
48 Wichita, Kansas
51 Wilmington, Delaware
52 Baltimore, Maryland
53 District of Columbia
54 Richmond, Virginia
55 Parkersburg, West Virginia
56 Greensboro, North Carolina
57 Columbia, South Carolina
58 Atlanta, Georgia
59 Jacksonville, Florida
61 Louisville, Kentucky
62 Nashville, Tennessee
63 Birmingham, Alabama
64 Jackson, Mississippi
65 Fort Lauderdale, Florida
66 Puerto Rico, Virgin Islands, Guam, American Samoa, Palmyra, Palau, Midway Islands, Wake Island, Jarvis Island, Johnston Island, Kingman Reef, Northern Mariana Islands, Tutuila Island, Baker Island, Howland Island, Federated States of Micronesia, Canton (Phoenix) Islands
67 Virgin Islands
68 Sacramento, California
71 Little Rock, Arkansas
72 New Orleans, Louisiana
73 Oklahoma City, Oklahoma
74 Austin, Texas
75 Dallas, Texas
76 Houston, Texas
77 San Jose, California
81 Helena, Montana
82 Boise, Idaho
83 Cheyenne, Wyoming
84 Denver, Colorado
85 Albuquerque, New Mexico
86 Phoenix, Arizona
87 Salt Lake City, Utah
88 Reno, Nevada
91 Seattle, Washington
92 Anchorage, Alaska
93 Portland, Oregon
94 San Francisco, California
95 Los Angeles, California
96 Guam
97 American Samoa
98 AC (International)
99 Honolulu, Hawaii

Copyright © 1995 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 5, No. 9, 6/95