Learn how to spot a debt relief scam
As I mentioned in an earlier post, complaints against debt collectors are on the rise.
But there's also concern among consumers about the legitimacy of companies that offer services to help people get debt collectors off their backs.
For example, the Massachusetts attorney general's office took about 3,000 calls last year focused on foreclosure, debt and credit issues. The chief complaint: misleading and improper fees from companies advertising debt solutions.
And that state's governor's office found that six of 13 foreclosure companies it monitored sought up-front fees in violation of state regulations.
"By charging up-front fees with no guarantee of success, these companies can further harm a consumer’s situation instead of improve it," said Barbara Anthony, Massachusetts' undersecretary of the Office of Consumer Affairs and Business Regulation.
Companies providing debt-relief services often use the same language, make the same promises and provide the same services, making it difficult for consumers to pick the good from the bad.
If you are looking for help with debt, we recommend seeking advice from the National Foundation for Credit Counseling. On its website, www.nfcc.org, click on "Find a Counselor" and follow the prompts to get a list of nearby agencies.
Short of that advice, here's three ways to avoid picking a bad debt-relief company:
Check with the Better Business Bureau to see if the company is listed. If a report is available, look specifically for the length of time the company has been in business, the number and type of complaints, how the company handled complaints, and any other names the company may be operating under.
Newly formed businesses might have questionable intentions. Complaints from consumers and how the business responded are a good indication of what is in store for future clients.
Do research. Consumer advocacy groups, attorneys general's offices and public records could give you information proving the legitimacy of a business. Be sure to take note of all names the company is doing business under.
Do an online search for information outside of that provided by the company. This might include independent reviews, public forums and industry news. Always remember to consider the source of information when giving weight to the accuracy.
Comments, complaints and reviews made by the public can be added to what you have already learned but should not be used alone to make your final decision.
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