Watch out for the latest credit and debt settlement scams…
Financially strapped consumers and rising unemployment create a perfect environment for the latest round of debt settlement scams. Targeting consumers who are behind on their bills and promising to negotiate with credit card companies to reduce the amount they owe, the scammers charge a huge upfront fee from $600 to $1,500 and offer to save the consumer thousands of dollars in interest charges. The scammer requests the cardholder’s credit card information, places a conference call to the credit card issuer’s customer service rep and requests that the consumer’s interest rate be reduced.
More than 300 complaints have been received by the Better Business Bureau from disatisfied consumers for services never rendered. The complaints, which began back in mid-2007 and escalated during the latter part of 2008, prompted U.S. Senator Chuck Schumer, D-NY to issue a scam alert. Federal and state regulators have brought a number of actions against debt-relief companies for misleading and deceptive practices. At best, these companies are charging big bucks for something that consumers have the power to do on their own. At worst, they may be violating FTC laws, the National Do Not Call list and the Telemarketing Sales Rule.
“From most of the people we talked to or that we received complaints from, they received a call that said the company could help negotiate a lower interest rate with their credit card company and then as a result they would save money in the long run,” said Better Business Bureau spokesperson Alison Southwick. Using spoof Caller ID that displays a fake phone number or purports to be ‘card services’ or ‘cardholder services’, determining where the calls are coming from is difficult. Callers often hang up if you ask their whereabouts, Southwick says.
If you do receive one of these calls, never give out your credit card information. Report the call to the National Do Not Call Registry at www.donotcall.gov. If you make the mistake of giving out your card information, your credit card has been charged and you can’t get a refund, dispute the transaction with your credit card company. You can also report the scam to the Federal Communications Commission, the Federal Trade Commission, the Better Business Bureau and your state attorney general.
There are some obvious red flags to look for before signing up. A questionable debt settlement company will charge a large upfront fee and make the following false claims:
- To eliminate all of your debt
- To protect against lawsuits
- That debt settlement won’t affect your credit report
Many of the services offered by these companies are things the consumer can do on their own, without the high financial burden. Talk to your lenders about your situation and see if they’ll negotiate with you. There are also low-cost, non-profit credit counseling agencies that may be able to help lower your interest rates and reduce your debt.
* Be sure to visit our site for the best low interest credit cards >