Written By: Stan Brown
Cash-strapped consumers staring at mounting credit card debt
, student loans, and car payments know all too well the dread of answering the phone or opening an email. After all, chances are it will be a creditor looking for repayment.
Unfortunately, scammers also know the desperation these struggling borrowers face and prey on them with debt relief scams. Scammers will tell people that they will help them pay or settle their debt for a fee.
In reality, they take money from consumers and disappear, leaving the victim out the payment, typically a high one, and still stuck with their debt. In some cases, consumers don’t immediately realize they have been scammed, and as a result, their accounts default and their credit scores deteriorate.
These scams aren’t going away anytime soon given the outstanding U.S. consumer debt, which stands at $3.9 trillion
Of that, $1.03 trillion is in revolving debt with 41.2 percent of all households having some form of credit card debt. Add student loans to the mix, and it is not surprising that the bad guys find fertile ground.
While most consumers are aware that if it seems too good to be true, then it usually is, that isn’t stopping them from getting scammed.
With piles of credit card debt flooding their mailbox each month, they are desperate for help and are more willing to believe the unbelievable.
But you don’t have to be the next victim of a debt relief scam. There are telltale signs that the offers aren't legit.
Here’s a look at five of them:
1. They come out of the woodwork
Scammers don’t know you and as a result, can’t pick up the phone and text you an offer to help you get out of debt.
They will instead resort to all sorts of tactics to pique your interest whether that means sending an offer via the mail, reaching you via phone call, or blanketing your email with ways to pay down your crippling debt.
Recently, they have also turned to social media to find their next victims.
If you are on the receiving end of one of these unsolicited communications, that should raise a red flag.
Yes, legitimate debt relief companies will use the same means to reach you, but the scammers tend to be more aggressive.
If you are getting contacted with promises to wipe away your debt and it seems too good to be true, it probably is.
There are plenty of services out there that can help. Contacting one yourself — after researching the company and the service — is a much better way to protect yourself from getting scammed then acting on an unsolicited sales pitch for relief.
2. They charge an upfront fee
According to the Better Business Bureau
, a common thread between all debt relief scams is the request for an upfront payment to help you get out of debt.
The scammers make all sorts of promises for the fee but can’t deliver on any of them. Some scammers will tell you they can remove late payments or bankruptcy from your credit report, offer to give you a new, clean credit identity, or claim to negotiate with the lenders or credit card companies to get rid of the debt entirely.
A legitimate debt relief company won’t require you to make a payment up front. The practice, after all, is illegal. What’s more, there is never a guarantee that creditors will forgive debts nor is it a service you need to pay for.
3. They deploy aggressive sales tactics
Scammers want to hook you within the first attempt and will employ aggressive sales tactics to get your money or sensitive information.
If you are dealing with a debt relief company that tells you to act now or lose the ability to access its services, that's an indication that the company is not legit.
The same goes for any tactics pressuring you to decide on the spot. Reputable companies will give you time to consider the services they offer and the fees attached to them. Scammers will not.
If you are dealing with a purported company that is being overly aggressive, hang up the phone, delete the email, or toss the mail in the trash.
4. They want your personal information
For scammers and hackers, your sensitive information — such as social security number and bank account login credentials — are the keys to your castle, and they will go to great lengths to get them. One way is through a debt relief scam.
When pretending to help customers get out of debt, they will request personal information including your social security number.
Armed with that, they can steal your identity to open up credit cards in your name or otherwise hurt your finances.
These unscrupulous companies will also ask for account information, so they can supposedly go into your accounts and make payment decisions for you.
No legitimate credit counseling agency will ask for your social security number, and certainly not through the phone or email. If the debt relief companies require any of this information, it's a red flag that something is amiss.
The ease with which consumers can access credit has resulted in a nation that owes a lot of money. That can be very challenging for scores of people who are living paycheck to paycheck and even those who aren’t.
While shedding the burden of such mounting debt is always the goal, how you approach the process is vitally important.
Debt relief scams are plentiful — with the bad guys making unrealistic promises for a fee. They often disappear with the cash in hand leaving the victim in an even worse financial position. If it seems too good to be true, it is.
There are many nonprofit and for-profit legitimate debt relief companies
that will help you manage the amount you owe. They will never charge an upfront fee, require you to offer up personal information, or make promises they can’t fulfill.
Stan Brown is a writer and analyst for a multinational bank. He has over 15 years of experience in the financial industry and draws on that experience to write about finances for various websites.