Scammers are constantly plotting new ways to steal personal information, but some of the most advanced scams are polished enough that innocent people are fooled into giving their information away willingly. If you have debt, you are more vulnerable to scammers preying on the stress that comes along with it and those desperately looking to work their way out of debt. It’s important to watch out for these debt relief scams that claim to have success bringing people out of debt. Consumer protection starts with your own diligence in investigating legitimate debt relief services. When you're desperate for some financial help and relief from debt, how do you know whom to trust?
If you aren’t familiar with debt relief scams, consider yourself lucky. These schemes have a serious financial impact on people every day, and they don’t discriminate by age, income, or any other factor. Let’s take a look at some shocking statistics.
These statistics underscore the importance of vigilance and due diligence when seeking debt relief solutions. With all of the money lost to these situations, it’s important to be aware of how prevalent these scams can be and how to identify them.
Any program claiming it has links to the Internal Revenue Service (IRS), FTC, or any other claims of an official affiliation with the government is made to gain trust and obtain your personal information, like your social security number or bank details, to commit fraud. These programs will often target people with student loan debt, offering debt assistance and saying that an agency is offering a debt settlement. Even if they are using an official logo, these debt relief or debt settlement programs are not to be trusted because they don’t exist.
Anyone charging an upfront fee for debt relief is a red flag. It is against the law to charge anything before providing results to their program based on FTC guidelines. This could be disguised as “administrative fees, “contract fees,” or something similar. Real debt relief companies — like non-profit credit counseling agencies — typically only collect fees after they’ve successfully negotiated with your creditors or enrolled you in a working program. Anything else is suspect.
Asking for money (even a small fee) before any work has been done is unethical in any type of business, but here it is just to steal. These scammers will take your money and go dark, which creates more financial woes for you. The same goes for asking for personal information like your social security number, bank account details, or identifying information besides the basics. Don’t be fooled into providing anything as part of their “process.”
Does the company guarantee to “settle” or eliminate your debt, no matter your situation? There is no such thing as a guarantee when it comes to debt forgiveness; even a legitimate agency cannot promise that or even guarantee a reduction of your debt because creditors have the final say on whether to accept any type of settlement offer.
You should be wary of any language that sounds like it is set in stone. Phrases like “100% debt elimination” or “guaranteed approval” are major red flags – especially if they don’t consider your financial situation or the type of debt you have. If you are lured in by this promise by a so-called debt consolidation company or anyone else, you will not get results.
Much like a “one-day-only” sale that happens multiple times a year, this type of language is used to push vulnerable people into making rushed choices without really knowing what they are signing up for. Scammers use urgency to override your critical thinking – real solutions give you time to ask questions, weigh options, and review everything in writing.
If they tell you to act now, that is a clear warning sign to not act at all! There is no countdown clock on legitimate help with debt relief. If you are someone in high debt, you'll know there are no quick fixes or room to make rushed choices.If you feel like you’re being pushed into signing up "right now," it’s likely a scam designed to get your personal information fast. Making your debt management plan takes time and should be thought through.
With some trending videos on social media, these legalese-themed scams are becoming more common. Scammers will make videos claiming your debt is illegal, unjust, or just not enforceable. Whether it is AI or a paid spokesperson, their information is false theories or fake promises of secret documents to erase your debt. We promise, and Instagram Video or YouTube short is not the place that you will find an answer to your debt. Following along with these schemes in particular is especially harmful because it could land you in legal trouble, worse credit, or increased outreach from creditors.
Do you know where to turn for safe, trustworthy financial guidance? You should never give out your personal information to any business unless you are sure of its legitimacy. Using our checklist, you should be able to make an informed decision and judgment on if an offer or company is real. Here at Addition Financial, we provide financial education beneficial to reaching your goals (without the setbacks of scammers). While you might feel more prepared now when considering a debt relief company, you may need information on other vulnerabilities and threats. Check out our other blog post: 5 Fraud Prevention Tips to Help Keep Your Finances Safe for more information.
Whether you have student loan debt, credit card debt, or something else, we’ll offer credit counseling and advice on your debt management and help strategize how you can pay down your debt in a safe and smart way.
If you ever have questions about fraud or scams involving your finances, check out our Security Center or reach out to us, as our team values the financial safety of our members. Not yet a member? Join us and experience the benefits we have to offer in helping you reach your financial goals.