A debt settlement scam can be one of your worst nightmares especially when you are already financially strained. It can leave you into an even worse shape, running you out of money while you are still in debt. It’s unfortunate that there are several fraudulent debt relief companies out there waiting to prey on already vulnerable customers. If you’ve been targeted by such a company then it’s crucial to act swiftly and protect your finances as much as you can. In this guide, you’ll learn all about how to report the scam and how to get your money back.
Understanding A Debt Settlement Scam
Debt settlement scams typically involve a company or an individual making false promises to negotiate your debt with your creditors for a fee. The main goal of these scammers is to run you dry of your money. Sometimes, these scammers use your personal information for identity theft too. In both cases, you’ll end up in hot waters which is why it’s quite important to ensure first that you are working with an authentic debt settlement company.
Want to know how to identify if it’s a scam or an authentic company? Here are some red flags that you should be aware of;
- They’ll ask you for a small fee upfront without even starting the negotiating with your creditor
- They’ll make false promises and unrealistic claims like eliminating your debt completely.
- They’ll probably advise you to stop making payments to your creditor and stop your communication with them too.
- They’ll lack accreditation and won’t be transparent about the details of the deal.
Usually what happens is that these scammers take your money and then disappear without ever contacting your creditor.
Reporting A Debt Settlement Scam- Step By Step Guide
If you’ve been unfortunate to end up with a scam debt settlement company then there are certain measures you can take to recover your loss. Starting with;
1-Gather The Documentation
Before you report the scam to the authorities, you must gather any evidence that you can. From written contracts to written communication, emails, text messages, call records, bank information, bank transactions and the exact information of the company. You must gather all the required documents to make your case. This is of utmost importance especially if you want to strengthen your claim and support your complaint.
2-File Your Complaint With The FTC (Federal Trade Commission)
The FTC is specifically made to investigate any fraudulent business practices. You should head to their official website and report the scam with all the documentation. The FTC won’t cater to your individual complaints, in fact, they use the reports to build a case against the scammers.
3-File Your Complaint With The Consumer Financial Protection Bureau (CFPB)
The CFPB is another great option if you want to file your complaint with a financial service that actually does help resolve your complaints with companies. You just have to head to their official website and submit your report. The CFPB will then forward your complaint to the company and will inform you about their response accordingly.
4-Contact Your State’s Attorney General
If you want to recover your funds then it’s best to contact your state’s attorney general. Most states have such laws regulating debt settlement services. The attorney general’s office will then launch your investigation and help you with your loss recovery.
5-Post On The Better Business Bureau (BBB)
Informing the BBB won’t help you recover your funds but at least it’ll alert others and pressure the businesses to resolve the complaints.
6-Report Your Local Authorities
The next option is to report to your local district attorney or the police department. These authorities can take legal action against the company that scammed you and they can even pursue criminal charges if required.
How To Get Your Money Back After A Debt Settlement Scam
It really does sound a little challenging to get your money back after being scammed by a settlement company but it’s not impossible. You just need to know the right path forward that can help you recover your loss;
1-Disputing The Charges
If you paid the company using your credit or debit card then don’t wait and immediately contact your bank to report the fraud. Ask them for a chargeback. After reviewing your report, they might be helpful.
2-Ask For A Refund From The Company
Send a certified letter to the company and state that you’ve filed your complaint against the company with the government authorities. Most scammers don’t want to get into any legal issues which is why they might refund your amount.
3-Filing A Small Claims Lawsuit
In case the company doesn’t agree on refunding your amount then take your case to the small claims court. It’s important to first check the procedure of your local court along with the limit of the amount you can claim.
4-Use Of Legal Aid Service
If nothing works out for you and you can’t afford a lawyer for your case then simply contact your local legal aid office. They might be able to help you with legal advice, a demand letter or simply the court filings.
Protecting Yourself From Future Scams
Debt settlement can be very overwhelming and getting scammed by a settlement company can really wreak havoc on your mental health as well as your finances. To avoid such misfortunes in the future, you must first verify the authenticity and the legitimacy of the settlement company you are hiring. For the best and the most professional debt relief services, you can try Mountains Debt Relief. We believe in transparency with our customers and ensure that their debt is settled just the way they want with their creditors.
Here are some important tips you can use to protect yourself from fraudulent debt settlement companies;
- Always check for accreditation of the company with organizations like National Foundation for Credit Counseling (NFCC) or AFCC.
- Never pay any upfront fee to the company before the debt is resolved or settled.
- Get every detail of the contract in writing and ensure proper documentation.
- Research the company thoroughly on BBB, Trustpilot or Google Reviews.
- Opt for consultation from a non profit credit counselor.
Final Thoughts
Dealing with a debt settlement scam may seem very daunting but if you just take the right steps, you won’t just be able to protect your finances but you can even stop the scammer from victimizing others too. It’s best to take your precautionary measures before time and do proper research before hiring a debt settlement company. It’s not the kind of task you should rush into, in fact, settlement is a crucial step that you must take carefully. A legit and verified debt settlement company won’t put you through a lot of hassle, won’t demand any fee upfront and won’t take advantage of your vulnerability. You just need to find the right service provider that’s trustworthy and reliable.
FAQs
Q1. Can I Get My Money Back After Being Scammed By A Debt Settlement Company?
Yes, it’s possible to get your money back after being scammed by a settlement company. You just have to get in touch with your bank especially if you’ve used your credit or debit card to pay the company. Inform the bank about the scam and dispute the charges. Moreover, you should file a complaint with the FTC, the CFPB and your state’s attorney general. In some cases, even the law enforcement agencies can help recover your loss.
Q2. How Long Would It Take To Get A Refund?
The timeline is different for each case. For example, if you file for a chargeback with your bank, it might take a few weeks for you to get your refund. In case you involve the government agencies and decide to take a legal action, it can take you months to get your money back. You just have to stay persistent and provide proper documentation in order to speed up the process.
Q3. Is It Illegal For Debt Relief Companies To Charge Fees Upfront?
Yes, under the FTC’s Telemarketing Sales Rule, it’s illegal for any debt relief company to charge any fee upfront. A legitimate company will only charge you once the debt has been settled or resolved. If someone’s asking you to pay a small fee before beginning the negotiations, it’s best to avoid them and don’t pay anything at all as it’s most probably a scam.