Debt Relief Scammers Halted by FTC

The Federal Trade Commission took steps last week to halt another group carrying out a debt relief scam on unsuspecting consumers. The settlement involves a $500,000 fine and prohibition of the defendant’s future in the debt relief industry.

Here’s a look at the specifics of the case and how to avoid similar scams in the future.

Advertisements Offer “Quick” and “Easy” Debt Elimination

According to the FTC, the scam worked like this:

Misleading advertisements: The company advertised that consumers could make “one simple call” to eliminate their debt for “far less” than they owed.
Sale of contact information: Rather than actually following through with these lofty promises, though, the company in question (which called itself both The Hermosa Group and the Financial Future Network) simply sold consumers’ names and contact information to other debt relief service providers or other sales groups.
False claims: Because of this deceptive advertising, the FTC alleged that the company’s ads were false and unsubstantiated. It seems that the company in question led customers to believe that it would perform the debt relief services advertised rather than selling their information to other companies.

Protect Yourself from Debt Relief Scams

It’s always good to know that one more scammer is off the streets (so to speak), but the unfortunate truth is that there will likely be another scammer behind this one. So here are some tips for making sure you don’t part with your hard-earned money by forking it over to scammers.

Watch out for words like “quick” and “easy”: Anyone who has actually dug out of debt (whether by filing for bankruptcy, visiting a credit counseling center or through some other method) knows that is neither quick nor easy. It takes a while and it can be grueling, at times – but that’s because the payoff of being debt free is worth working for.
Be wary of over-enthusiastic ads: Remember that advertising costs money, and if a company is advertising its services, it’s making enough profit to do so. Naturally, that profit comes from its customers – which would be you, if you decide to use its services.
Know the truth about bankruptcy: Bankruptcy is the only federally created way to relieve your debt – which doesn’t mean it’s right for everyone, but it does mean that you know what you’re getting if and when you decide to file for bankruptcy. And in many cases, consumers might do less damage to their finances by filing for bankruptcy than by wasting money on un-helpful or fraudulent debt relief services.

If you’re interested in trying a non-bankruptcy option for relieving your debt, proceed with caution: make sure to check out the company’s reputation by visiting your state’s Better Business Bureau web site and looking for customer reviews online.

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