States attorney generals across the nation are getting more and more calls every week complaining about credit repair companies who have defrauded them.
The complaints have become so common place, that many attorney generals are beginning to file suits against some of these companies.
A typical scam works like this: The companies usually target consumers who are far behind in their credit card or other unsecured loan payments.
You will receive either a phone call or a letter in the mail.
The company will promise to lower the amount that you owe to the card companies and other creditors by negotiating a settlement with them for a reduced lump sum payment, or some other major concession.
They will then ask for a down payment of around $1,500 or so and possibly also ask for authorization to automatically deduct a certain amount of dollars from your checking account each month.
They will promise to handle everything for you and you don't even have to be involved.
What happens, in many cases, however is that the consumer is fleeced.
The company may, or may not contact the various creditors to negotiate payments with them.
Sometimes the debt reduction company will follow up with creditors and sometimes they will not.
And, some of the debt agencies are simply fly by night agencies, who will work a certain area for six months or so and then leave town.
Across the country, complaints from consumers about being defrauded have increased almost twofold from 6 to 7 years ago.
The biggest problem seems to be that the entire debt relief industry is largely unregulated.
This means that one of the few ways to strike back against them is litigation.
And, many times these agencies will make the consumers problem even worse.
For example, after signing a contract with these debt reduction agencies, it is usually assumed that they will make the proper payments to your creditors.
In many cases, however, they do not make these payments.
So, not only are you out the monies that you paid the credit reduction agency.
You also still owe your original creditors.
Unfortunately, many of the victims of these sort of scams are unsavvy consumers who believe that these companies must be legitimate, or else why would they be allowed to set up office in that state.
As is true in most cases involving lots of monies and unregulated industries, corruption runs rampant.
And while it is good that various attorney generals are beginning to file more suits against these types of companies, it is still unlikely that the fleeced consumer will ever see a bit of his money back.
The complaints have become so common place, that many attorney generals are beginning to file suits against some of these companies.
A typical scam works like this: The companies usually target consumers who are far behind in their credit card or other unsecured loan payments.
You will receive either a phone call or a letter in the mail.
The company will promise to lower the amount that you owe to the card companies and other creditors by negotiating a settlement with them for a reduced lump sum payment, or some other major concession.
They will then ask for a down payment of around $1,500 or so and possibly also ask for authorization to automatically deduct a certain amount of dollars from your checking account each month.
They will promise to handle everything for you and you don't even have to be involved.
What happens, in many cases, however is that the consumer is fleeced.
The company may, or may not contact the various creditors to negotiate payments with them.
Sometimes the debt reduction company will follow up with creditors and sometimes they will not.
And, some of the debt agencies are simply fly by night agencies, who will work a certain area for six months or so and then leave town.
Across the country, complaints from consumers about being defrauded have increased almost twofold from 6 to 7 years ago.
The biggest problem seems to be that the entire debt relief industry is largely unregulated.
This means that one of the few ways to strike back against them is litigation.
And, many times these agencies will make the consumers problem even worse.
For example, after signing a contract with these debt reduction agencies, it is usually assumed that they will make the proper payments to your creditors.
In many cases, however, they do not make these payments.
So, not only are you out the monies that you paid the credit reduction agency.
You also still owe your original creditors.
Unfortunately, many of the victims of these sort of scams are unsavvy consumers who believe that these companies must be legitimate, or else why would they be allowed to set up office in that state.
As is true in most cases involving lots of monies and unregulated industries, corruption runs rampant.
And while it is good that various attorney generals are beginning to file more suits against these types of companies, it is still unlikely that the fleeced consumer will ever see a bit of his money back.
Source...