The following statements are red flags that indicate fraudulent practices and dishonesty on the part of debt settlement companies. If a debt settlement makes any of the following claims, don’t do business with them. In fact, if you hear any of these statements from a company that claims to settle debts, you should report it to the Federal Trade Commission or FTC. Here are some examples of the fraudulent claims we have read:
The debt settlement industry has changed dramatically in the last few years. In 2007 there were more than 2000 debt settlement companies; now there are fewer than 200. Before December of 2010, bad debt settlement companies took money up-front and then never settled their client’s debt. In December 2010, the FTC amended the Telemarketing Sales Rule to protect consumers from these debt-relief scams.