National Consumer Protection Week is March 4 through March 10 and now is a great time to remember how important it is to protect your credit and guard against debt problems.
It’s just too easy to be a victim of some of today’s debt scams and credit repair scams.
Many are marketed as valuable services for those who are dealing with serious debt problems, so if you’re in a tough financial situation, these “programs” seem to be the ultimate solution.
But understanding how these scams work and what red flags to look out for can help you make some well-informed decisions and avoid becoming a victim.
Make sure you steer clear of these four types of credit and debt scams:
#1: Debt Collection Scams
When you’re dealing with “zombie” debt collectors, someone will claim that you owe a certain amount of money and must pay it immediately, or perhaps within 30 days.
They’re called “zombie” debt collectors because they seem to come back from the grave – trying to resurrect ancient debts that you thought were long since buried. Often times, these old debts are many years or even decades old and the statute of limitations has expired, meaning the debts are no longer legally collectable.
In other instances, zombie debt collectors are simply scam artists, telling you that you owe bogus debts that you don’t in an effort to get you to pay them directly as a way to “clear up” your debt. Ultimately, they are trying to collect a debt that doesn’t even exist.
Take extra steps to ask them to verify any debt you allegedly owe. And don’t blindly send money to a debt collector without proof that you truly owe the bill and that you are still legally obligated to pay the debt.
#2: Debt Elimination Scams
Fraudsters in this type of scam claim that they can completely eliminate debts you rightfully owe such as your mortgage, car payment, or private loans. The biggest red flag for this type of scam is the unrealistic promise that you – or a special program – will pay off all your debts in a very short period of time.
Some debt elimination scam artists will say you don’t even owe certain debts. For instance, they’ll feed you a lot of hocus pocus about you not owing federal taxes or not owing your mortgage due to some technicality or some obscure law. Don’t fall for these cons.
And if someone is talking about a “program” to get you out of credit card debt, keep in mind that real debt management programs usually take about three to four years to complete. Most legitimate debt relief programs cannot be completed within a few months.
#3: Credit Repair Scams
People or companies that claim they will fix anything on your credit for a fee or boost your credit score quickly are usually part of a credit repair scam.
Some of the key signs that you’re dealing with a scammer include: not receiving a copy of the contract to view before you sign the documents; not being given a copy of the “Consumer Credit File Rights Under State and Federal Law,” which lets you know your rights to obtain a credit report and dispute inaccurate credit report information; or if you’re asked to sign a form waiving your rights under CROA, the Credit Repair Organizations Act.
It’s important to remember that when it comes to credit repair, most of them can’t do anything to improve your credit that you can’t do yourself. Be wary of credit repair programs that require you to pay a upfront fee and that promise to have accurate, but negative, data removed from your credit reports.
#4: Identity Theft Scams
When someone uses your Social Security number to open credit accounts, gets loans under your name, or uses your credit card information to access your accounts, you are the victim of identity theft.
Identity theft scams are on the rise as more people shop online and use their credit cards and debit cards regularly for everyday purchases. Make sure you’re checking your account statements regularly and monitoring your credit report so that you can report identity theft right away.
