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Hefty debt can leave consumers vulnerable to fraud

The recent recession has left many people in financial trouble. Many consumers face financial hardships that stem from overwhelming debt, often in the form of credit card debt. In an attempt to regain control of their finances and pay down their credit card debt, many Texas residents turn to debt consolidation companies for help. However, consumers must be alert to the risk of falling prey to scams that attempt to take advantage of people in times of financial need.

The Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) have both issued warnings to the public to be on the lookout for bogus companies posing as credit card debt consolidators. These fraudulent businesses attempt to claim association with the CFPB, then ask their victims for credit card numbers, claiming they need the information for account verification. There have also been an increase in complaints that claim that these types of companies are charging service fees in advance, according to reports from the FTC.

The FTC has taken the matter into its own hands and filed a complaint against two companies that the agency had been investigating for suspicions of misleading debt consolidation claims. The investigation found that the two companies were posing as fictitious government agencies that were supposedly created to help consumers with making their mortgage payments, as well as transferring credit card balances. The websites of the two companies displayed pictures of the U.S. Capitol, neither company has any connection with the U.S. government.

Consumers in Texas should be vigilant when considering the services of a debt consolidation company. While debt consolidation can be a savvy financial decision, there are many firms that look legitimate, but in fact are simply there to scam consumers who are looking for a quick fix to their financial woes.

Although it may be tempting to try to quickly fix overwhelming debt issues, consumers should know that true debt consolidation takes time and a great deal of regular payments before improvement is realized. For some, debt consolidation may not be enough to regain financial stability. In those cases, bankruptcy may offer a better solution to eliminating debt and giving consumers the chance to start with a clean slate.

Source: Fox Business, "Be on the lookout for summertime credit card scammers," Joe Taylor Jr., July 27, 2012

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