4 Warning Signs of a Debt Relief Scam

It sounds almost too good to be true: Just as you’re fretting about your debt more than ever, a solution seems to drop out of the sky. You’ve received a call, email or letter that promises to change everything — someone wants to help you get rid of your debts!

Consumers, beware. Anytime an offer seems too good to be true, it usually is. Anyone vowing to quickly and effortlessly erase your debt is likely to try to prey on your financial vulnerability and good faith. There have been many instances of phony debt relief operations, like a 2017 case in Florida that “bilked tens of millions of dollars from financially strapped consumers, including elderly and disabled people.”

There’s a huge difference between reputable debt relief firms with a proven track record of settling millions in debt and scams. And, for your own wellbeing, it’s your responsibility to differentiate between them when you’re trying to tackle your debt.

Here are four major warning signs of a debt relief scam.

Scam Sign #1: Requesting Payments Up Front

Protecting yourself against a scam first and foremost means knowing your rights as a consumer.

The Federal Trade Commission’s 2010 Telemarketing Sales Rule prohibits debt relief firms from charging up-front fees. They are only allowed to solicit payment after they’ve successfully settled or otherwise resolved a participant’s debts. A legit debt relief company will adhere to this rule; a scam operation will typically not.

Scam Sign #2: Guaranteeing Certain Results

Another provision in the FTC’s regulation forbids debt relief organizations from misrepresenting their services. There are simply no guarantees in the world of debt settlement. Final outcomes depend on many factors, including the creditor in question, the negotiation process and more. Reputable companies will try their best to get enrollees’ debts settled for a percentage of the original balances, but they will not guarantee any certain outcomes ahead of time.

Be very wary of anyone who tries to assure you they can resolve all your debt, or get rid of your debts within a set timeframe.

Scam Sign #3: Requesting Personal Info Right Away

As the AARP reminds consumers, consider it a red flag if a company withholds information about itself “unless you provide financial information such as credit card account numbers and balances.”

The first step in a legitimate debt relief partnership will always be a consultation during which you’ll explain your overall financial situation without getting pressured to hand over highly personal and financial information. Scammers, on the other hand, will generally try to gain access to that data as quickly as possible.

Scam Sign #4: Failing to Provide Adequate Information

Any firm that acts dodgy when you ask them for more details is not your friend. Reputable debt settlement organizations will have no problem pointing you to a website — and you should be able to find plenty of reviews of their services online from prior customers. Scammers, on the other hand, may hem and haw when you ask them for specifics about their services.

Legitimate debt relief companies will disclose the potential benefits of enrolling in a settlement program as well as the potential risks you’ll face. They will also disclose information like how long it may take to see results, how much it may cost you in fees, how to access and control any associated accounts and potential negative consequences you could experience.

Debt relief scams talk a good game but will not deliver results — instead they’ll take whatever hard-earned money they can get out of victims. Be on the lookout for the major warning signs: guaranteeing results, asking for payment up-front, asking for personal information right away and providing insufficient information about their services.

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