We're in an industry with a lot of fraud in it. Pretending otherwise would be strange, and being vague about it would be worse — because the specific mechanics are what you need in order to recognise an offer before you've paid for it.
This article describes practices, not companies. We're not naming firms, partly because it's legally sensible and mostly because the practices outlive the companies. Learn the mechanism and you'll spot the next version of it.
The tell that covers most of them
Almost every scam in this space requires someone to misrepresent something to a bank, a lender, a government agency, or a platform. Not always you personally — sometimes the provider does it on your behalf, which is worse, because your name is on the application.
So the diagnostic question is simple: what exactly is being represented, to whom, and is it true?
If the answer involves a company that appears older than its real operating history, a person who appears to control a business they don't, an address where nobody works, an identity that isn't yours, or money that arrived by a route you're not permitted to use — you've found it.
Everything below is a variation on that theme.
1. Aged shelf corporations
The pitch: "Buy a company registered in 2016. Lenders want two years of operating history — this gives you eight."
The mechanism: someone registers companies and lets them sit. Years later, the entity is sold to you and the ownership changes. The registration date is genuine. The operating history is fiction — no revenue, no bank record, no filings that reflect activity, no relationships, nothing.
Why it fails: lenders don't only look at a registration date. They look for the record that should accompany it — bank statements, tax filings, trade references, a Dun & Bradstreet file with real payment history. A company registered eight years ago with none of that reads as exactly what it is. The mismatch is the tell, and underwriters know the pattern well.
Why it's worse than wasted money: if the point of the purchase is to make a lender believe the business has history it doesn't have, you're making a material misrepresentation on a credit application. That is a different category of problem from a bad purchase.
The legitimate alternative is unglamorous and real: build a genuine business credit file in your own entity. Vendor tradelines, early payments, a Paydex score in 45–90 days, lenders who underwrite on revenue rather than age. Slower than a lie and it doesn't unravel.
2. "Credit partners," nominee signers, and CFO-for-hire
The pitch: "Your credit is thin. We'll add a US partner with an 800 score as an officer of your company. Lenders see their credit. You keep control."
The mechanism: someone with strong personal credit is added as an officer, director, guarantor or member so their profile carries the application. Sometimes they're given a token equity stake — 1%, 5% — to make it look substantive.
Why the token equity doesn't fix it: the question a lender is asking is who controls the business. If the person on the application doesn't genuinely control it — doesn't make decisions, doesn't operate it, has never seen the books — then the application misrepresents control. A small equity stake doesn't convert a fictional role into a real one. Beneficial-ownership concepts in banking and lending are about substantial control, not just percentages.
Why people fall for it: it's presented as a partnership, which is a legitimate thing. Real partners exist. The difference is whether the person's role is real.
The honest test: would this person's involvement survive a lender asking them, under oath, to describe the business's operations? If not, they're a prop.
3. CPNs — "credit privacy numbers"
The pitch: "A legal alternative to an SSN for privacy purposes. Start your credit file fresh."
The mechanism: you're sold a nine-digit number and told to use it on credit applications instead of an SSN.
What it actually is: there is no legal "credit privacy number." The numbers sold this way are typically unissued Social Security numbers, or real ones belonging to children, the deceased, or people in institutions. Using one on a credit application is identity fraud and making false statements to a financial institution.
Why it's the most dangerous item on this list: unlike the others, this one can produce criminal exposure for the buyer, not just a failed application. And the people selling it have your passport, your address, and your documents.
If anyone offers you a "CPN," "credit profile number," or "secondary credit number," end the conversation and don't send them anything further.
4. Rented tradelines
The pitch: "We'll add you as an authorised user on an aged, high-limit account. Their fifteen-year history appears on your credit file next month."
The mechanism: a stranger with an old, well-managed credit card adds you as an authorised user for a fee. Historically, the account's history appeared on your report.
Why it mostly doesn't work now: bureaus and scoring models have spent years filtering for exactly this pattern, and lenders manually reviewing a file can usually spot an authorised-user account with no relationship behind it. The value has largely been engineered out.
The distinction that matters: a parent adding a child, or a spouse adding a spouse, or a business owner adding an actual employee — legitimate, common, fine. Paying a stranger through a broker is the version that's fraud-adjacent by design.
What you're really buying: a decaying asset with a compliance tail attached to your name.
5. "Guaranteed funding" packages
The pitch: "$50,000 to $150,000 in business credit in 30 days. Guaranteed approval."
The mechanism: the provider submits a rapid barrage of applications across many issuers within a short window, before the inquiries from each application appear on the reports the other issuers are checking. Sometimes it produces cards. Often it produces a file full of hard inquiries and new accounts that suppress your score for a year or more.
Why "guaranteed" is definitionally false: the provider does not make the lending decision. No one outside an issuer can guarantee an issuer's decision. That word alone is sufficient reason to walk.
The economics that tell you everything: the fee is charged whether or not the funding arrives. Ask what happens if you get nothing. The answer is usually a definition of "success" broad enough to include almost any outcome.
6. Formation upsells that sell you nothing
Less serious, more common, and worth naming.
- Charging for a D-U-N-S number. Dun & Bradstreet issues these free. A fee to fill in the form is a service; a fee presented as buying the number is not.
- Charging heavily to fax an SS-4. Getting an EIN is a one-page form. Some providers charge hundreds for the submission alone. That's legitimate as a convenience — just know what you're buying. (Our EIN article walks the whole process.)
- "Anonymous LLC" packages priced far above the state fee for privacy that the state provides by default in Wyoming or New Mexico.
- Compliance packages that don't mention Form 5472. If a formation service sells you an annual "compliance" product that doesn't cover your actual federal filing obligation, ask what exactly it covers.
None of these are fraud. They're overpricing, and the fix is knowing the underlying cost.
7. The provider who becomes your responsible party
The setup: a service offers to be listed as the responsible party on your EIN application, or as a member or manager on your formation, "to simplify things."
Why it matters: the responsible party is the person who controls the entity. Your company's identity in the IRS's records shouldn't point at a vendor. And a provider on your formation documents as a member has an ownership claim you'll have to unwind — sometimes expensively, sometimes at the worst possible moment, like a sale.
Your name goes on your company. Always.
8. "We know a guy at the bank"
The pitch: "We have a relationship. Normal applications get rejected, ours get approved."
Why to doubt it: fintechs and banks make onboarding decisions through compliance processes, not favours. Where genuine introducer relationships exist, what they buy is a properly prepared application and sometimes a faster look — not a bypass of underwriting.
The honest version of this service — which we sell — is preparation: correct documents, consistent details, an address that passes, an entity in good standing, a clear business description, applying to a provider that serves your country. That's real value. "Guaranteed approval through our contact" is not.
9. Exchange-control "solutions"
Specific to founders in countries with capital controls, and the one most likely to be framed as a helpful favour.
The pitch: "Payment is difficult from your country? Use our agent. Better rate, no paperwork." Or: "Send it in three transfers so the bank doesn't ask questions." Or: "Pay a relative abroad and they'll forward it."
What each of those is: parallel-market conversion, structuring, and third-party payment. All three are offences in most restricted-currency regimes. The exposure is yours, not the provider's — you're the resident subject to those rules.
What legitimate looks like: an invoice naming a real legal entity, paid from your own account through your own bank, within your country's legal allowances, with documentation your bank is happy to see. If a provider can't be paid that way, that's information about the provider.
A checklist before you pay anyone
- Is the provider a real, identifiable company with a registered entity, a physical address, and named people? Can you verify the entity exists in its state's records?
- Is the pricing public? Firms that hide pricing until a call are optimising for pressure.
- Does anything in the offer require a false statement to a bank, agency, or platform? If yes, stop.
- Are outcomes guaranteed? If yes, stop. Nobody can guarantee a third party's decision.
- Will everything be in your own name — company, accounts, credit, assets? If a provider holds anything, ask precisely why and how you get it back.
- What happens if it doesn't work? Ask for the refund policy in writing before paying.
- Is there a written agreement stating scope, deliverables, timeline, and refund terms before payment?
- Do they tell you what they can't do? A provider who has never said "that's not possible" hasn't been honest with you yet.
- Would this survive scrutiny — from a bank, a regulator, a future acquirer? If the answer depends on nobody checking, it's not a structure. It's an exposure.
What to do if you've already been caught
Most people who've been burned don't tell anyone, which is exactly how these operators keep working.
Stop sending money, including "just one more fee to release the funding" — that pattern is its own scam stage.
Get your documents back if you can, and consider what identity documents they hold.
Check what was actually done in your name. Pull your credit reports. Check whether an entity was formed with you on it, and where. Check for applications you didn't authorise.
Don't compound it. The instinct after losing money is to recover it through a bolder version of the same thing. That's the instinct these operators rely on.
The rebuild is usually shorter than you fear — a real credit file takes six to twelve months, and a real company can be formed this week.
The uncomfortable part
We sell services in this market, so treat this article with appropriate suspicion too. The checklist above applies to us. Our pricing is public, our refusals are published, our agreement is provided before payment, and everything we build is in your name. Hold us to that, and if we ever fail it, tell us.
The honest summary of this whole category: if the value of what you're buying depends on someone not looking closely, you're not buying an asset. You're buying a delay.
Keep reading
Once you've identified a legitimate formation service, the next step is choosing the best US state for your LLC — our guide covers the Delaware vs Wyoming decision. You'll also need a US business bank account — our guide covers the top rejection causes. And for your annual US filing obligations, read our Form 5472 guide — the $25,000 penalty for non-filing applies regardless of whether your LLC had income.