Businesses warned over debt elimination scams
Consumers have been warned about contacting businesses that promise to get them out of debt, following an increase in complaints in recent weeks.
The Department of Enterprise Trade and Investment’s Trading Standards Service said that in the last three weeks it had received 10 complaints, and 30 in the last six months, with some consumers losing up to £1,500.
DETI said the companies target consumers who have taken out a loan, credit or store card and offer to cancel debts, write-off outstanding balances and help claim back money.
Damien Doherty from Trading Standards Service said: “Consumers are often cold-called by businesses that have no detailed knowledge of the consumers' credit agreements. They claim that many of these agreements are completely unenforcable, leading the consumer to believe their debts can be cancelled and that they may be able to claim back thousands of pounds.
“Consumers who agree to avail of such services, are asked to pay large up-front fees, often up to £500, so the company can review their credit agreements. In reality, many of the claims are exaggerated and there is only limited evidence of success, when consumers have received money back.”
He said the organisation had received complaints indicating that action to reclaim money was not happening and when customers attempted to contact the debt elimination business there is no dialling tone or the contact telephone number has been cancelled. Mr Doherty said: “Many consumers who have been affected by these scams say that they were led to believe the debt elimination business contacting them was doing so as part of a government initiative to get people out of debt.
“They also say that they were subjected to high pressure cold-calling from call centres and encouraged to make an on-the-spot decision. The debt elimination companies have also reportedly told consumers that there are ‘over 25 million unenforcable credit agreements in the UK', and ‘credit card debts could be written off in six weeks’. As we now know, however, many of these businesses are unable to justify these claims.”
He added: “Like most scams, when something seems too good to be true, it usually is, and this is certainly the case here.”