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Attorney General Warns Consumers About Credit Repair and Debt Settlement Scams

Florida Attorney General Bill McCollum issued a consumer advisory warning Floridians about scams related to credit and debt issues. Companies offering credit repair solutions or debt settlement were among the top concerns reported to the Attorney General’s Office last year. The Attorney General noted that, given the current economic climate, disreputable companies will likely continue to prey on consumer’s credit and debt concerns.

“Consumers who are seeking legitimate assistance are being deceived and often required to pay substantial up-front fees that put them even further in debt,” said Attorney General McCollum. “My office is working hard to deter these companies from engaging in deceptive business.”

Credit repair schemes usually involve claims to improve credit scores or eliminate bad credit and are sometimes part of other operations claiming to negotiate or erase debt. Consumers need to be cautious of firms offering credit relief, including debt management, credit counseling and credit card rate reduction services.

Debt settlement scammers promise they can pay off consumers’ debts for a fraction of the amount owed, but instead collected large up-front fees and leave customers with little or no money to pay creditors. Consumers should avoid companies that make outrageous promises and collect up-front fees before providing services.

Debt collectors are another area of concern for consumers who are struggling with credit and debt issues. These companies often harass or even threaten consumers in an effort to collect money owed. Debt collectors are legally prohibited from misleading consumers or threatening them to collect payments. They are also prohibited from calling after 9:00 p.m. and may not contact consumers at work if they know the consumers’ employers disapprove.

The Attorney General has been working closely with the Florida Senate to address several of these issues, and Senate Bill 1702, a proposal by the Senate Banking and Insurance Committee, is scheduled for hearing next week. The legislation includes the Attorney General’s suggested language for expanding the Office of the Attorney General’s authority to pursue debt collectors. Specifically, the bill will make certain debt collector practices a violation of the Florida Deceptive and Unfair Trade Practices Act (F.S. Ch. 501 Part II), providing a clear basis for pursuing civil litigation. This new tool would give the Attorney General enforcement authority over all entities covered under the act and provide for stricter penalties and broader relief for consumers. The bill also includes provisions for addressing credit relief and debt settlement scams.

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About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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