Debt Settlement Fraud on the Rise

I’m sure this will come as no surprise to you if you have been paying attention to the news at all over the past few months but the United States unemployment rate is now at its highest level since 1983 at 8.9%. And of course, it stands to reason that people are now struggling more than ever to pay their bills. Credit card delinquencies are now at record high levels.

Consumer debt settlement companies I’m now being called upon more than ever to help beleaguered consumers with their credit troubles. Unfortunately, that has also given rise to many unscrupulous companies that prey upon the people reach out to them for help. As a crime of opportunity there are more and more Individuals defrauding people were claiming that they are legitimate debt settlement companies that are trying to help them.

The legislative director of the Association of Settlement Companies (a Wisconsin based lobbying group), Wesley Young, estimates that there are now more than 500,000 customers of debt settlement companies throughout the United States. He also places the number of debt settlement companies at around 1000 and growing.

While the association of settlement companies places standards upon the companies it represents, which stands at about 30% of the industry, many of these companies operate completely by their own set of rules. That is a recipe for disaster. The end result for many of these companies is that they actually end up costing consumers more money and further damage their credit ratings. The very things that they were supposed to be helping people with.

There are now attorney generals from several states investigating the industry. Lisa Madigan, the attorney general for the State of Illinois, has filed two lawsuits against debt settlement companies. Greg Abbott, the attorney general of Texas has sued one debt settlement company. And Andrew Cuomo, the attorney general of New York has begun to conduct a nationwide investigation of the industry.

It will be interesting to see where these lawsuits and investigations will lead to. I am betting that there will be comprehensive legislation on a national level as the claims of fraud begin to rise. There is no doubt that individual states will also have to step in and do their part to protect consumers.

Related Information:

  1. Understanding How Debt Settlement Works While many Americans struggle to make their credit card payments, more and more are beginning to turn to debt settlement when they find they can no longer afford the debt…
  2. Consumer Debt Falls for the Seventh Straight Month Consumers continue to cut debt in the face of this seemingly endless recession. The Federal Reserve Board reported that August represented the 7th consecutive month that consumers have reduced their…
  3. Student Credit Card Debt Reaches Record Levels We all know that college tuitions are spiraling out of control. And now I’m afraid there is some more bad news to add to the equation. Credit card debt for…
  4. National Arbitration Forum Successfully Sued Did you know that when you sign a cell phone contract, or agree to the terms and conditions of a credit card account, or take out a consumer loan, or…