Avoiding Debt Relief Scams
- Have you heard that old cliché that says: "If something sounds too good to be true, it probably is?
" The statement still rings true today, and is especially noteworthy where money, credit cards and personal debt are concerned.
If you glance at the latest Dow and S&P charts, you might think the economy is starting to improve. It is slowly improving, but many Americans are still searching for full-time employment, struggling with household bills, and wading through mounds of credit card debt. While many of us desperately want the economy to take off, and our personal finances to get better, we must remain vigilant in the ongoing fight against financial fraud and debt relief scams.
The Federal Trade Commission (FTC) recently broke up an allegedly phony debt relief services operation that claimed that, for $995, it would dramatically reduce consumers' credit card interest rates. Under a settlement, reached as part of the FTC's continuing efforts against frauds that target financially strapped consumers, the defendants will be banned from robocalling consumers and from selling debt relief services. The FTC operation, which was based in Canada and New York, used telemarketing boiler rooms in Orlando, Florida, to defraud consumers. Although the defendants operated under several different names, they often used "AFL Financial Services," or variations of the name "AFL."
These rogue companies exist only to separate you from your money, and getting mixed up with any debt relief service is bound to be more trouble than it’s worth.
According to the FTC's complaint, F&F Payment Processing Inc., Bajada Management Group Inc., Baird B. Fisher, Jacqueline M. Fisher, and others used illegal robocalls and falsely promised refunds to consumers if they did not save at least $2,500 as a result of lowered credit card interest rates. Based on records obtained by the FTC, the operation took in over $13 million from more than 13,000 consumers. When the case was filed, the court halted the operation and froze the defendants' assets pending a trial.
The companies that were shut down by the FTC claimed they would negotiate lower credit card interest rates. At most, they sometimes telephoned credit card issuers and attempted to conduct three-way calls among the credit card company, the consumer, and one of the defendants' so-called financial representatives. Often the companies did not make these calls at all. When they did, the calls were unsuccessful. Some credit card issuers refused to participate in the calls as a matter of policy. Instead of a reduction in interest rates, consumers, who were already in dire financial straits, found themselves saddled with an additional $995 credit card charge.
Here’s a fact: there really is no such thing as "debt relief." No company can help you boost your credit score, automatically lower your credit card interest rates, or magically consolidate your outstanding debts. Improving your credit score takes time and is best achieved by paying your bills on time each month.
Additionally, you could setup your own legitimate debt consolidation by calling your bank, or an organization like Lendingtree to obtain a loan that combines several debts into a single, more manageable one. If you have a relatively good payment history, you could also contact your credit card issuer and ask them to consider lowering your interest rate. The worst they can say is, "no," but the inquiry alone won't affect your credit score.
No matter which action you take, none of them should require a $995 fee.
We can't stop financial fraud in its entirety. There will always be individuals and companies preying on vulnerable Americans by running debt scams and financial schemes. But you don't have to be a victim. Any scheme that promises to melt away your credit card debt (with a hefty fee upfront) is a good old-fashioned scam.
The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC's online Complaint Assistant
or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC's website provides free information on a variety of consumer topics