The Latest Scams Circulating the Consumer World. Be warned. Be informed.

April 2005

Credit Counseling Scams

When 2 out of 3 Americans who use credit cards are unable to pay off their balance every month, it's not surprising to hear that predatory organizations exist to take advantage of the demand for credit counseling.  

People who are in financial difficulty are often overwhelmed and unable to keep up-to-date on their home loans, car loans, personal loans, and credit card payments. Desperate to find help, 1 in 11 families contact a fraudulent credit counseling service that offers to solve all of their debt woes. Unfortunately, these "one-call-does-it-all" organizations are a total scam.  

Phony credit counseling companies win people over by claiming to be non-profit organizations that help you solve your financial problems and pay off your debts. But, in actuality, the "counselors"

1. A legitimate organization will go over all of your debts with you and try to get you on a budget to control your finances.
2. If you're past the point of needing a budget, a legitimate organization will negotiate with creditors on how much you can pay them, and they'll create a debt-management plan for you.
3. A legitimate organization will not charge you thousands of dollars up front. A high, upfront cost is a sure sign of a fraudulent company.

   National Federation of Credit Counseling