The offer got Dena McLaughlin's attention: "Establish a new credit report in just 14 days!" stated American Financial Inc.'s direct-mail promotion.

Since declaring bankruptcy, the Cleveland-area mother of two has had to cut corners to make ends meet. She works two jobs--as a corporate advertising coordinator and as a real estate agent. She worries about money.

So the opportunity to wipe her financial slate clean was tempting. The additional promise of a preapproved credit card with a $5,000 credit limit to help re-establish her "new, legal and unblemished" credit identity convinced her. That alone was worth the $104 cost and shipping, she figured. And the company even pledged to send her a check for $44 just for trying the credit file program.

"They had the [money-back] guarantee and I figured why not?" says McLaughlin.

She ordered it last June. Almost two months later, after complaining to the Better Business Bureau (BBB), she finally received the package. But the company delivered none of the bonuses--no check for $44, no credit card, only a manual with step-by-step instructions on how to alter her financial identity.

"They are telling you to change your Social Security number, to do a fictitious one, and use a friend's address, where you've never lived," says McLaughlin, who returned the materials and requested a refund. "You can't do what they are telling you to do. It's a joke."

Ed Johnson, president of the metropolitan Washington area Better Business Bureau, says American Financial's credit repair program spurred 762 inquiries and 31 formal complaints at the BBB in 1999, ranking it third among the year's most called-about companies. Most of the complaints alleged American Financial failed to deliver what it promised.

The biggest problem with credit identity schemes such as this, warns Johnson, is that they are outright illegal. Not only do they victimize the customer, they even could land their victims behind bars. "Basically it is asking people to commit fraud," says Johnson. "It boils down to creating a fake ID. It is a federal crime to make false statements on credit or loan applications, or to misrepresent your Social Security number."

The U.S. Federal Trade Commission (FTC) has repeatedly warned consumers that, in effect, it has never seen a credit repair service that was legitimate. Last May, the FTC took legal action against 16 defendants for selling instructions on how to substitute federally-issued, nine-digit employee identification numbers or taxpayer identification numbers for Social Security numbers and use them illegally to build new credit profiles. The defendants typically targeted consumers who had filed for bankruptcy and, like American Financial's promotions, claimed their credit identity plans were legal.

American Financial's mailings claim its corporate offices are located "on Pennsylvania Avenue in Washington, D.C," though the company has no D.C. telephone listing. Calls to the only number it gives in its promotions were not returned.

Meanwhile, Dena McLaughlin says American Financial didn't refund her money, as guaranteed, until she filed another complaint with the BBB. Two weeks ago, she got her refund.

"The end result is that people who can really least afford it add further debt to an already-burdened financial situation," says Johnson, who advises consumers heavily in debt to steer clear of all credit repair schemes. "You can't just fix your credit. You owe the money. Unless a company is willing to forgive your debt or you are able to negotiate a consolidated lower payment, no one can take out a magic eraser and make your debt go away."

Got a consumer complaint? Question? Smart consumer tip? E-mail details to oldenburgd@washpost.com or write Don Oldenburg, The Washington Post, 1150 15th St. NW, 20071.