Four years removed from one of the greatest economic crises in history, consumers are still reeling from the aftereffects. So, many consumers, feeling the crunch of growing credit card debt, are seeking help from companies holding themselves out as debt relief providers. And getting nothing in return.
These companies generally offer to settle a consumer’s debt with creditors for substantially less than the debt’s principal through monthly payments that the company holds in escrow. Unfortunately, many of these companies not only fail to fulfill their promises to consumers, but fail to offer any services at all. Companies charge large upfront fees, or multiple hidden fees. Often, a substantial portion of a consumer’s monthly payment goes to the company’s fees, with little to nothing offered toward reducing the debt’s principal.
The Department of Justice Consumer Protection Branch, in collaboration with its investigative partners, is working to prosecute such companies. But we need your help. So, if you are contemplating debt relief services, the following tips may help you avoid scams:
For more information on debt relief scams, see the Federal Trade Commission’s website. Additional information on legitimate debt relief services can be found on the Consumer Federation of America’s website (PDF).