Credit Counseling Scams

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If things were bad enough for a consumer overwhelmed with debt, it seems that there are many “credit counseling services” that will target that stressed out consumer to take advantage of his debt generated plight to scam him out of whatever funds he still has. 

Credit Counseling Help: Are they Scams?

Some credit counseling scams involve promising to work with the debtor’s creditors and involve the credit counseling service making payments from the consumer’s funds to the creditor. The scam involves a situation where the credit counseling service takes the consumer’s funds to pay its own escalating fees and the original credit is never paid one dime.  The debtor finds out he has been scammed only when the creditor takes the threatened actions against him.   

Advance Fee Loan Scam

Another common scam often called the “advance fee loan” involves getting an unsolicited call offering to give you a loan to pay off your debt.  The caller promises to send you money but needs you to pay up front “processing” or “application” fees first.  The debtor provides the upfront fees but the promised loan never materializes.

Telemarketing Scams for Credit Counseling and Repair

The Telemarketing Sales Rule protects consumers by requiring that credit counseling services may bill for credit repair services only after

(1) the time during which the promised services were to be provided has passed and

(2) the debtor has been provided with proof that the credit repair promised has been achieved as described by way of a consumer report from a consumer reporting agency. 

Reporting Credit Scams

There are additional protections available to consumers who believed they may have been scammed by a credit counseling service.  The consumer may report the incident to the Federal Trade Commission, the FBI, and file fraud alerts on is credit report with the three credit reporting bureaus, Experian, Equifax and Transunion. 

Many scammers posing as credit counseling services are in truth identity thieves’ collecting sensitive information on consumers that they use later to obtain credit using their name.  It can be a disturbing time for an already over stressed consumer.  Obtaining the help from a Consumer Protection Attorney to protect against more harm and to preserve the future and provide a fresh start for the consumer becomes inescapably essential.