More fraudulent debt relief and credit recovery businesses halted

The Federal Trade Commission is cracking down on companies that take advantage of Americans who are saddled with debt. Knowing that there are many consumers seeking debt relief, businesses abound that promise deals such as low-interest credit cards, instant approval for those with bad credit, balance transfers and other programs to help those in debt. Unfortunately, many of these companies use shady business practices such as confusing contracts and “robocalls” with misleading claims, which often end up fleecing people who are already facing financial challenges.

The U.S. District Court for the Southern District of Florida is shutting down such a business: The Debt School, a company that charged fees of up to about $500 to renegotiate its customers’ credit card interest rates. These types of fees are commonly charged by dubious credit recovery businesses, often with the promise to reimburse the fees once a contract is signed. The FTC temporarily closed the operations of another company, National Card Monitor, after the company charged fees of nearly $600 for low-APR credit cards, then refused to honor the allegedly promised refunds.

Many companies that use deceptive practices and don’t honor reimbursements and other promises meant to attract customers are violating federal laws that were put in place to protect consumers.

FTC representatives warn consumers to watch out for signs pointing to financial fraud, such as programs that require payments up front for credit relief and low-interest cards, and robotic telemarketing offers for credit cards. Credit card debt continues to be a major problem for many Americans, and consumers should take great care with the businesses that promise relief. A bankruptcy lawyer can be an excellent resource for determining what is a legitimate debt-relief program.

Source: Fox Business, “FTC Shuts Down Telemarketers Promising Balance Transfer Offers,” Joe Taylor Jr., Jan. 3, 2013