Debt relief scams rampant as national credit card debt hits $1 trillion

Credit card debt has hit one trillion dollars and consumers are finding themselves overextended and in need of repairing their credit.

The issue is scammers and bad actors have entered the frame and consumers are as vulnerable as ever.

The Better Business Bureau says it’s received more than 12,000 complaints concerning these companies over the last three years.

The Federal Trade Commission has received more than 80,000 reports in the same time period.

Logan Hickle from the BBB says this is a fertile field for scammers and consumers need to beware, “There are more people taking out credit card debt because of inflation so, it’s definitely an opportunity for those bad actors to come in and try to take something from the consumer at home.”

According to one study debt relief is a $17 billion industry covering debt consolidation, debt settlement, and credit repair companies.

The information being shared on consumers’ accounts within that industry opens customers up for cold calls and empty promises, all for an upfront fee.

Logan Hickle says if that company is reaching out to you, you need to make sure you take that step back and do your own research.

The key is to know a few things before signing on the dotted line. The Consumer Finance Protection Bureau lists these red flags to watch for when working with a debt consolidation company:

1. Charge upfront fees.

2. Promises to make your debt disappear.

3. Tells you to stop communicating with your creditors.

4. Says your unsecured debt can be paid off for pennies on the dollar.

5. Informs you of a new government program to clear your credit card debts.

If you are interested in consolidating debt, here are some resources:

National Foundation for Credit Counseling

Money Management International