Top Credit Scams to Avoid
March 3rd, 2008
By The XBanker
It’s National Consumer Protection Week, which may not mean a heck of lot to you (after all, there’s no school or work holiday). But for those in the consumer protection world, it’s a chance for us to try to draw some attention to all those scams we hear about on a regular basis. Here are some of the top credit rip-offs that surface time and again:
1. Credit repair scams: There are no “loopholes” in federal law that allow consumers to remove accurate but negative information. That doesn’t mean that kind of info isn’t removed sometimes, but there’s no secret way to accomplish it – short of illegally paying an insider at the credit agencies.
2. Piggybacking: Renting out tradelines to boost someone’s credit is still around, but it’s illegal if you use it to commit credit fraud. I’ll post more about this soon, but in the meantime, you can read this NY Times article.
3. Debt reduction scams: Credit counseling, debt negotiation and debt settlement can be legitimate ways to deal with your debt. But hundreds of new, inexperienced companies have cropped up to take advantage of consumers who are dealing with the credit crunch. Many of these companies will take your money and run. You’ll still be trying to deal with your debt, and they’ll be sipping margaritas on the beach in Mexico, courtesy of your fees. (Or trying to pay off an FTC fine whichever comes first.)
4. Debt elimination scams: Sorry, but debt is not illegal. Given the rates some companies charge, it should be! Steer clear of companies promising you they can legally wipe out your debt. It just ain’t so.
If you’ve been taken by a credit scam, make sure you report it to the FTC and your state Attorney General’s Office. They won’t take action on your individual case, but they do stop companies when they see a pattern of abuse.
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