Getting Your Money Back From Illegitimate Business Debt Relief Companies
How Debt Relief Scams Work
Shady debt relief companies use high-pressure sales tactics to get desperate people to sign up for their “services.” They make big promises about slashing your debt or stopping collection calls. But after you pay their fee—which can be hundreds or thousands of dollars—they often do little or nothing to actually resolve your debt.
Some signs a debt relief company is a scam:
-- They promise to make debt “disappear” or say they can eliminate your debt for pennies on the dollar. There are no magic fixes for debt—these are false promises.
- They demand payment upfront before providing any services. Legitimate companies typically collect fees only after settling debts.
- They tell you to stop paying or communicating with creditors. This can cause further problems.
- They promise “guaranteed” results or a “new government program” to erase debt. Don’t believe it.
- They won’t provide a contract outlining services, fees, and your rights. Big red flag!
Protect Yourself From Scams
Be wary of debt relief companies that cold call, spam email, or advertise on TV promising a quick fix. Here’s how to avoid scams:
- Research companies thoroughly before signing up. Check reviews and complaints filed with the Better Business Bureau, state attorney general, and Consumer Financial Protection Bureau.
- Don’t ever pay upfront fees. Legitimate companies collect fees only after settling debts.
- Make sure the company is licensed in your state. Contact your state attorney general to verify licensing.
- Get promises in writing. Review contracts carefully and make sure you understand all terms and fees.
- Talk to creditors yourself. Don’t let a debt company negotiate for you unless you’ve vetted them thoroughly.
- Consider other options. Non-profit credit counseling provides budget help and can negotiate with creditors for free. You may also manage debt yourself.
Dispute the charges with your bank:
- Credit card chargeback – If you paid with a credit card, dispute the charges as fraudulent. Provide evidence it was a scam. The credit card company can reverse the charges.
- Bank refund – If you paid from a bank account, ask your bank to refund the payment as unauthorized. Provide proof of the scam.
Take the company to small claims court – If other methods don’t work, sue in small claims court to get your money back. Bring evidence like contracts and correspondence. Statutory damages may also be awarded.
Hire a consumer protection lawyer – For large disputed amounts, consider hiring a lawyer to negotiate or take the company to court on your behalf. They have experience getting refunds from shady companies.
Report scams to the FTC – File a complaint at ReportFraud.ftc.gov. The FTC uses complaints to help stop scams. Include details like the company name, location, and how you paid.
-Persistence Pays Off
Getting scammed leaves a bad taste. But taking action quickly gives you the best chance to get your hard-earned money back. Don’t hesitate to enlist help from regulators, your bank, and attorneys. And warn others about debt relief scammers by reporting them to consumer protection agencies. By sticking up for yourself and sharing your experience, you can help put shady companies out of business.
Here are some other laws and legal information related to debt relief services:
The Credit Repair Organizations Act – This federal law regulates credit repair companies and prohibits deceptive practices. It lets you recover damages from violations [FTC guide].
The Telemarketing Sales Rule – Prohibits abusive telemarketing practices like excessive calls or misrepresentation. Applies to some debt relief services [FTC overview].
State debt adjusting laws – Most states regulate debt settlement/adjustment companies and prohibit charging upfront fees [NCSL summary].
-Unfair and deceptive acts and practices laws (UDAP) – Prohibit deceptive business practices under state consumer protection laws. Violations may lead to financial penalties [FTC guide].
Federal Trade Commission enforcement – The FTC has brought many law enforcement actions against illegal debt relief schemes [FTC case examples].
Consumer Financial Protection Bureau enforcement – The CFPB supervises and regulates debt relief providers and has brought enforcement actions [CFPB orders].
-Section 5 of the FTC Act – Prohibits unfair or deceptive practices in commerce. Used by FTC to prosecute debt relief scammers [Cornell Law summary].
False advertising laws – Prohibit deceptive claims and false promises used to promote debt relief services [NOLO overview].
Hope this info on getting refunds from debt relief scams and related consumer laws helps provide options and strategies for recovering your hard-earned money. Let me know if you need any clarification or have additional questions!