American and Canadian consumers hold more than $16 trillion of debt in the form of mortgages, credit cards, personal lines of credit, home equity lines of credit, student loans and personal loans. Better Business Bureau serving Eastern Carolinas is warning about predatory companies and scams designed to take money from consumers.
An investigative study by Better Business Bureau (BBB) finds some debt relief, consolidation, and credit repair companies fail to deliver on big promises to those looking for help reducing or eliminating their debt or fixing their credit score.
While some consumers report positive experiences with the credit and debt assistance industry, BBB consumer complaints say predatory companies have lost them thousands of dollars and left them worse off than before.
Key Findings
Some companies rely on consumers’ confusion and urgency around unpaid debts to extract thousands of dollars in fees. BBB’s study found that few, if any, debt and credit services can legally charge fees before services are rendered, but some disguise the fees as service charges.
“Many of the services offered by debt relief and credit repair companies can be done by consumers themselves,” said Mallory Wojciechowski, president and CEO of BBB serving Eastern Carolinas. “That includes calling their creditors to see what type of payment reduction or settlement they can achieve.”
BBB offers tips for consumers considering debt relief or credit repair:
- Use AnnualCreditReport.com to get a free credit report.
- Don’t pay or provide payment information until service is rendered.
- Critically examine any guarantee made. Few, if any, companies can ensure a credit or debt company will agree to negotiate with them or adjust reports.
- If you are in default, call debt holders yourself and attempt to negotiate a lower debt payment.
- Check monthly bank statements to avoid recurring charges from companies.
- Search online for free information.
- Don’t be rushed. Unscrupulous businesses and scammers both use high-pressure tactics.
- Avoid giving away personal banking information until you are 100% certain a company is legitimate.
- Refuse to work with companies that won’t tell you your rights when it comes to credit repair or debt relief.
- Be wary of anyone claiming to be associated with a government agency.
Local and National Statistics (2020- June 2023):
- 11,900 complaints and negative reviews about debt consolidation, relief, settlement and credit repair companies
- 1,607 BBB Scam Tracker reports
- $2.4 million lost to related scam
- 34 BBB Scam Tracker reports in South Carolina with $26,731.84 in losses
- 45 BBB Scam Tracker reports in North Carolina with $13,801 in losses
- 18 complaints filed against businesses located in South Carolina
- 65 complaints filed against businesses located in North Carolina (2020-2023)
Where to report:
- If you spot a scam, whether you lose money or not, report it to BBB.org/ScamTracker. Your report can help other consumers avoid falling victim to similar scams.
- Federal Trade Commission (FTC) or call 877-FTC-Help.
- South Carolina Attorney General or North Carolina Attorney General
For more information about BBB, visit BBB.org.
About BBB serving Eastern Carolinas
Better Business Bureau serving Eastern Carolinas is a 501(c)(6) not-for-profit corporation serving 48 counties in North and South Carolina. The organization is funded primarily by BBB Accredited Business fees from over 5,200 local businesses and professional firms. BBB promotes integrity, consumer confidence and business ethics through business self-regulation in the local marketplace. Services provided by BBB include reports on companies and charitable organizations, general monitoring of advertising in the marketplace, consumer/business education programs and dispute resolution services. All services are provided at no cost to the public, with the occasional exception of mediation and arbitration. Visit BBB.org.
