Scam Consolidation Companies

While there are lots of credit card debt consolidation companies out there which can help you consolidate your debts fairly and at low expense, there are many companies out there that are not at all legitimate or fair. As with many industries, there are many scams are there that are watching and waiting to take advantage of the unwary.

Falling prey to one of these scam consolidation companies usually means that you end up with more debt and in a worse financial situation, with absolutely no gain to show for the money that you paid to them. These businesses usually demand high upfront fees and delver only promises that your debt problem will be solved.

Know the signs

Fortunately, avoiding these types of scam artists does not have to be a matter of luck at all. With a little preparation and understanding of how they operate, you can be on the lookout for their operating methods and know what to avoid. Better yet, you can use the network of services offered to you here on this site. If, however, you insist on searching on your own, here are a few things you can look for to help you avoid those who might seek to take advantage of you:

• Demanding Upfront Payment: Despite federal laws against the practice, many businesses out there who are seeking to make a quick buck off of the desperate, will demand money up front before they have done anything to help you at all. These fees will typically be high, and, if you balk at them, they will deal with you and lower them because 'they want to help you'. If this happens to you, you should pick up your credit card debt and leave, running as fast as you can. Another tactic that goes hand in hand with this is to promise to refund most or even all of the payment after the services have been completed. The problem with this is that very few, if any clients actually manage to complete the program. Check with the Better Business Bureau before before getting involved with any program like this.
• High-Pressure Sales Tactics: Demands that you sign now, or pay now or do exactly as they suggest are a red-flag as well. Credit card debt consolidation companies should understand that they are there to try to sell a service as a support and not as a profit-machine. If you feel pressured to use a particular company, do your research on them through the Internet or with the BBB, before signing with them.
• Using the 'Non-Profit' Hook: A lot of illegitimate companies out there looking to make a quick buck (or a thousand), will call themselves 'not for profit' in an attempt to look like they are on your side. There are ways of determining whether or not their nonprofit status is legitimate, however, and one is by demanding that they fax over a copy of their 501-3(c) certification from the secretary of state in which they were organized. A scam company will refuse to do this and you should, in turn, refuse to do business with them. Another way is if they use one of the tactics mentioned earlier - high pressure sales, or demanding upfront payment for their services. A legitimate non-profit company will only charge a flat monthly fee for each account that they handle. This is because they get a lot of their funding through subsidizing by the financing companies that they work with.