06/15/2023
Typically, a debt relief scam begins with someone reaching out to you with a promise to reduce or settle your debt. They may even claim to be able to remove any negative information from your credit report. In exchange, you pay them an upfront fee for their services. These charges can sometimes be outrageously expensive. For example, in a 2022 lawsuit against a company called “ARCO Services” or “American Consumer Rights Organization”, the Federal Trade Commission (FTC) stated that ARCO charged some consumers upfront fees as high as $18,000 falsely promising to eliminate their debt.
Anyone initiating contact offering to take care of your debt for an upfront fee should immediately raise your suspicions (for one, such tactics are prohibited by the Federal Trade Commission), but don’t fool yourself into thinking you’re too clever to fall for a scam. “You’re in debt, you’re overwhelmed, you’re stressed out. You know, you’re limited with cash flow, you’re getting a lot of pressure from creditors, so you’re vulnerable,” says Leslie Tayne, debt-relief attorney and founder of Tayne Law Group. “And most consumers, unfortunately, under vulnerable circumstances don’t make the best decisions.”
By the time you’ve realized the payments aren’t resulting in any changes to your debt, it’s often too late. “I get a lot of people that come over from companies [that] just disappear — they stopped returning their phone calls,” Tayne says. ”[Clients] have no idea what happened with their money.”
It’s much easier to avoid a scam than deal with the damage it can cause. Below, we’ll take a look at common warning signs of debt relief fraud.
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Being in debt makes you a target for fraudsters, but these tips will help you spot the most common settlement scams.
