Consumer Alert
Signs of a debt relief scam
If you feel smothered by your monthly bills, a call from someone who says they can reduce or eliminate your debts might sound like the answer to your problems. But in many cases, unscrupulous people are behind these calls. They don’t have any intention of helping you, but are very interested in taking your money. How can you tell if you’re dealing with a debt relief scammer? Because they ask you to pay them before they do anything for you.
That’s what the FTC and the Florida Attorney General said happened in a massive debt relief scam they were able to stop last month. The defendants told people they would pay, settle, or get rid of their debts. But they didn’t. Instead, they just took people’s money. Over time, people found out that their debts were not paid, their accounts were in default, and their credit scores were severely damaged. Some people even got sued by their creditors, or were forced into bankruptcy.
Unfortunately, scammers try to take advantage of those dealing with debt – but there’s legitimate help out there. You can talk to your creditors directly to negotiate a modified payment plan. You also can look for credit counseling. To find reputable help, start with a credit union, local college, military base, or the U.S. Cooperative Extension Service. And if you decide to work with a debt relief service, remember this:
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A legitimate debt relief company won’t make you pay up front. That’s illegal.
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No one can guarantee that your creditors will forgive your debts.
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Your report can help stop a debt relief scam. If you spot one, tell the FTC.
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You can report what happened to you to the FTC at FTC.gov/complaint. You can tell how much money you paid and give your name and contact information if you want. The information will go into a database that the FTC and other law enforcement agencies use for investigations. That way the FTC will know that you paid money to the company.
The FTC has a list of cases that are providing refunds. If you see the name of the company you paid on that list, call the contact information on the list.
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You could talk to your credit card company yourself about a repayment plan. You do not need to pay a company to create a repayment plan for you.
If a debt relief company tells you to pay before it does any work for you, it's a scam. If you send your money to a debt settlement company instead of your credit card company, you are taking a risk. The payment might not get to your credit card company on time. You might get charged late fees. Read about different ways to cope with debt.
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When you check out a company, remember:
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