Credit Card Debt Relief Scams

Credit Card Debt Relief Scams

Written by Caitlin Wood
Last Updated March 4, 2014

When credit card debt is piling up all around you and a telemarketer calls offering credit card debt relief, it’s tempting to jump right in and take them up on their offer. Sheer desperation after the daily phone calls from the credit card companies make the idea of having your debt reduced sound like heaven.

However, you should think twice before buying into their services. These debt relief services are often scams. They will promise you the world and deliver nothing. The money you pay them will go toward their fees and not your debts. Before you know it, you will be even further behind on your payments. These tips will help you recognize and protect yourself from credit card relief scams.

How to Easily Spot a Scam

Recognizing a reputable company isn’t always as easy as recognizing a scam. Credit card relief scams always have tell tale signs that you should watch out for so that you don’t fall prey to their schemes and wind up even deeper debt. Here are some of the most common traits that should alert you to the fact that they are not a reputable company.

  • They promise to reduce your debts – these companies don’t have any weight at all with your creditors, yet make unrealistic promises.
  • They are eager to get your credit card numbers – If they want your credit card numbers before they will even talk about their services, hang up the phone. Even if they say it’s so they can talk with your creditors, they shouldn’t ask for that information until they discuss their services with you.
  • They are adamant that you need to take action immediately – They will tell you it’s to avoid further action by your credit card companies, but it’s really because they don’t want you to have time to think and to realize that you’re being scammed.
  • They imply that they work for a major credit card company – Major credit card companies like Visa or Master Card don’t call people offering credit card relief services for a fee. If you’re in doubt, hang up the phone and call your bank or you’re your credit card issuer.
  • They want money up front – If they want money before they’ve started helping you or explaining their services, you need to jump ship.

If You’re Still Not Sure

If you’re still not sure if the credit card relief company that contacted you is a scam, there are other things you can do before getting involved with them to protect yourself. By taking a few minutes now to do your homework and investigate the company, you can save yourself some headaches and a lot of money later.

  • Always look for a website – In this day and age, most companies have websites. If this company doesn’t have one, be skeptical.
  • Check for Reviews – Someone, somewhere has had an experience with this company, good or bad. Search online for reviews. Also, check the Better Business Bureau or Industry Canada to see if they have a listing for the company.
  • Look them up – Canada 411 is an excellent research point to check for both a physical location and telephone number. If you don’t get any results in there, chances are they are not actually in Canada. Google them and find out where they are actually located. If it comes up with a Canadian address, call the phone number and ask for information about their location.
  • No online presence at all – If there is no mention of the company name anywhere online it’s a reason for concern. Either the company doesn’t actually exist, or they’ve operated under other names in the past.

The Impact to Your Credit Rating

Credit card relief scams not only steal your money, they also negatively impact your credit rating. Your credit was probably not that great to begin with, or you wouldn’t have considered getting involved with their scam, but these companies can make it even worse.

  • They advise you to cease communication with your creditors – If you want the credit card companies to work with you to help you pay down your debts, you’ve got to communicate with them, whether it’s in writing or over the telephone.
  • They want to hold the money – If they plan on holding the money and giving it to the credit card companies at a later date, it’s always a bad idea. They could go out of business or you could change your mind. Additionally, while they’re holding the money that you’ve paid, your debts are getting months behind on their payments.

Remember, credit card relief scams will promise to reduce your debt because you’re paying the debt off quicker. However, they will always neglect to tell you that most of, or all of your money is going towards paying their high fees, not your debts. Meanwhile, your debts go unpaid for months, and you’re getting deeper and deeper into debt.

When contacted by these companies always do your research, and never be afraid to ask questions. If you’re still in doubt, always follow your gut instincts. They will never steer you wrong. After all, it’s your money, and your credit rating on the line.

Caitlin is a graduate of Dawson College and Concordia University and has been working in the personal finance industry for over eight years. She believes that education and knowledge are the two most important factors in the creation of healthy financial habits. She also believes that openly discussing money and credit, and the responsibilities that come with them can lead to better decisions and a greater sense of financial security. One of the main ways she’s built good financial habits is by budgeting and tracking her spending through the YNAB budgeting app. She also automates her savings so she never forgets to put aside a portion of her income into her TFSA. She believes investing and passive income is key to earning financial freedom. She also uses her Aeroplan TD credit card to collect Aeroplan points so that she can save money when she travels.

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