Debt elimination scams & how not to be a victim

With the rise of technology, scammers are finding more and more ways to target everyday consumers via debt-elimination scams. Being in debt is hard enough as it is, without having to worry about whether you can trust a friendly voice on the other end of the phone offering you a get-out-of-jail-free card. Listen in as host Kim Chapman sits down with Carmen Million of the Better Business Bureau of Central Louisiana to discuss debt elimination scams and how to protect yourself in today’s marketplace. 

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00;00;02;03 - 00;00;13;10

MC

Welcome to Money Matters, a podcast that focuses on how to use the money you have, make the money you need and save the money you want. Now here is your host, MS. Tim Chapman.

00;00;15;12 - 00;00;35;04

Kim (Host)

Welcome to another episode of Money Matters. I'm your host and the financial wellness director for Neighbors Federal Credit Union. Kim Chapman, whether you are joining us for the first time, or you've tuned in before, please hit the subscribe button so you can be notified when we post new episodes. Today I want to tackle a subject that might save you thousands of dollars.

00;00;35;11 - 00;00;56;21

Kim (Host)

But first, allow me to share my quote of the day. If it sounds too good to be true, it probably is. How many times have you heard that quote? It's as old and familiar as sliced bread. Think for a minute. When was the last time you heard about something and you thought to yourself, this really sounds too good to be true?

00;00;57;09 - 00;01;24;06

Kim (Host)

Did you listen to your intuition or did you act on it? Scam artists are hoping that you will act based on your emotion. We all have good days and bad days. However, we are more likely to be vulnerable on our bad days. And then that moment you can easily become a victim of fraud. Picture this scenario. You just get home from work, you have a slight headache, and you're trying to help your child with homework.

00;01;24;13 - 00;01;43;07

Kim (Host)

It's that new math. All while cooking dinner. You're kicking yourself. This is one of those days you really should have picked up takeout, but you didn't. You look up dinner is starting to burn and the stench of the burnt food quickly fills the room. You open the door to let the odor out, and guess what? The dog runs out.

00;01;43;28 - 00;02;18;20

Kim (Host)

If ever you needed a Calgon moment to take you away. It's now. Moments later you think you have things back under control. And then the phone rings Karen Smith. “This is Agent Peterson. Badge number 234810. I'm contacting you concerning a charge off. Account number 78990. I need to collect payment in the amount of $500 from you now, or I will be forced to turn this matter over to the authorities, which might result in your arrest and additional fees.”

00;02;19;17 - 00;02;43;05

Kim (Host)

The headache, the burnt food and the runaway dog. Have you off your game? So now, when another problem arises, you just want to make it go away. You haven't even had time to process the information and then this. He can cut you a deal on the balance. If you act now. Well, before you can wrap your head around the information, you hear the person on the other end offering a solution.

00;02;43;20 - 00;03;05;22

Kim (Host)

He has your full attention now. Never mind the fact that you don't even know if the debt is for you. Think about it. How many of us really have financial skeletons in our closet waiting to be exposed? I'll pause and let you think about it. Okay. It's just a secret between you and I. You just assumed this was one of them.

00;03;06;00 - 00;03;32;19

Kim (Host)

Before you know it, you've given out your account information. Problem solved, right? Wrong If you have a debt old or new, and you don't have a solid plan to get rid of it, you might be a prime target for a debt scam elimination. Or should I say a debt elimination scam? Ask yourself, are you enticed by promises to get rid of your debt with little or no payments or easy approval?

00;03;32;19 - 00;04;03;06

Kim (Host)

Loans for people with bad credit or promises to erase bad credit and instantly increase your credit score? How do you know which options are too good to be true? How do you know which options are legitimate and which options might be right for you? Our guest today is Carmen Million with the better business Bureau of Central Louisiana. Carmen has worked with the baby for over 38 years, and it is her mission to inform our consumers of the growing number of scams and fraud happening in our region.

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Kim (Host)

Welcome, Carmen.

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Carmen Million

Thank you, Kim. I'm really delighted to be here with you.

00;04;07;16 - 00;04;22;12

Kim (Host)

So, Carmen, some of our listeners may recognize your name because you are a media spokesperson for some of our local television stations. So when they want to expose fraud to our listeners, tell us a little bit about the baby. What do they do? And when do consumers contact them?

00;04;22;21 - 00;04;50;06

Carmen Million

Well, of course, the Better Business Bureau is a nonprofit organization. We were originally established in 1912 by local businessmen and it was to eliminate bad advertising or unethical advertising. And of course we have chapters all over the United States, all over North America that first focus on advancing marketplace trust Our main service is providing information for consumers and businesses so that they can make informed decisions.

00;04;51;10 - 00;04;57;03

Carmen Million

We also provide mediation, in some cases arbitration to order to resolve marketplace disputes.

00;04;57;27 - 00;05;15;00

Kim (Host)

Okay, so you heard my little scenario about the mom and the baby and the bad data is just, you know, typical things that happen every day. But I think a lot of our listeners believe that scams only happen to the elderly, you know, the old, the senile, those people with dementia. You know, is there any truth to that?

00;05;15;00 - 00;05;16;22

Kim (Host)

Is that myth or is that a fact?

00;05;17;05 - 00;05;38;08

Carmen Million

Well, in the olden days, I guess you could say, before technology became such a part of our everyday lives. Seniors were the biggest target because they were the consumers that are available. But again, with Technology Day, what do we do? We all carry our phones around with us. So everybody is a target. Your phone is right there. That's where scammers are going to try to reach you.

00;05;38;18 - 00;05;55;01

Carmen Million

And so you're an easy target. And I always tell consumers it doesn't matter how small you are, your education is, or what your background is. If the opportunity, just as you showed in your your scenario earlier, anybody can be a victim if the timing is right.

00;05;55;28 - 00;06;27;16

Kim (Host)

I agree completely. All right. So when it comes to debt is spread out across all age groups and our demographics, the pandemic and other catastrophes like Hurricane Ida created new financial hardships. Even recently, we had a tornado that, you know, did wreaked a lot of havoc in Kentucky. Of course, as a result, consumers of all ages have been forced to deal with unfortunate circumstances such as job loss, reduction of income, or even losing a family member that may have been their primary breadwinner.

00;06;28;10 - 00;06;48;14

Kim (Host)

National statistics report that more than 50% of Americans don't have a sufficient emergency fund, which, by the way, is three to six months of your living expenses, or even some of them don't have savings at all. I encounter this in my job every day, people that have no savings at all. That is really, really scary when I see that, you know?

00;06;48;15 - 00;07;12;11

Kim (Host)

But many consumers didn't have enough money or cash available, so they heavily reliant on credit, personal loans and even payday loans just to be able to take care of their basic needs. It's a cycle. If you don't have savings if you don't have emergency, it seems like credit is that crutch that we reach for. You know, first, you know, back in March of 20, 20 people thought the pandemic and the financial problems it cause would be short lived.

00;07;13;10 - 00;07;43;11

Kim (Host)

Oh if we could turn back the hands of time. You know so using credit and get it loan getting loans seemed like the real quick fix it seemed like, hey, I can do this. This will be over in a couple of weeks and then you know we can get back to business. Unfortunately, it's been almost two years and we're still dealing with the repercussions And it doesn't take long for that debt to build up, especially when you're having to use credit to take care of those basic everyday necessities, to pay your rent, to pay your mortgage, to pay your late bill, maybe even to get groceries, a medication.

00;07;44;05 - 00;08;03;18

Kim (Host)

So I've talked to several of our members, and they all agree that accumulating large amounts of debt can be extremely stressful. You know, as a certified counselor, I can tell you it often takes patience, discipline and sacrifice to pay off or to pay down your debt. I know this and that. What some of you are someone in debt really wants to hear.

00;08;03;19 - 00;08;23;19

Kim (Host)

I know when they come in my office, they want me to wave a magic wand and say, hey, sit in here for 60 minutes. And when you walk out, you'll feel better. You'll be better than the debt goes away. But no, you know, it takes a lot of hard work to be able to get rid of debt. So it's understandable why advertise in the office quick solutions to their problems and sound so appealing.

00;08;24;16 - 00;08;41;21

Kim (Host)

When I was young, I had my fair share of debt. And I can tell you the quick fix sounded good, but in the end I had to be patient. It took months and even years to pay off some of that debt. I had to really, really buckle down and become disciplined. You know, I had to create a budget.

00;08;41;21 - 00;08;58;22

Kim (Host)

I had to stick to it. And sometimes it meant, you know, making sacrifice, giving up things that I want it now for things that I wanted demos. Of course, consumers don't always realize they have a debt problem until it's too late. We get up, we go buy life. You charge a little here, you buy a little something there.

00;08;58;29 - 00;09;16;29

Kim (Host)

And so before you know it, you have a debt problem. So I really want to start out for our listeners to see how can you identify if you even have a debt problem? So I'm going to list a couple of things just for you to ask yourself. For starters, you don't know how much debt you have. Like I just mentioned, we're charging things.

00;09;16;29 - 00;09;39;05

Kim (Host)

We charge and debt and we don't even realize how big it is. And especially if you're not looking at those credit card payments, if you're not looking at those balances, you're just sitting in maybe a monthly minimum payment. You may not realize collectively how much debt you've accumulated. Maybe you have a debt problem. If you've been late on your own, your payments don't take a late payment for granted.

00;09;39;06 - 00;09;59;21

Kim (Host)

That could be a sign of a really bigger problem. Are you dodging calls from a bill collector? You know, today with caller I.D., it's still hard to tell who's calling you. And, you know, if you're not answering your calls because, you know, the bill collectors are calling, you know, you have some payments that are due that could be a debt problem.

00;10;00;16 - 00;10;24;22

Kim (Host)

Maybe you're borrowing money to pay back your debts. Are you basically bribing what we call robbing Peter to pay Paul? You're getting loans to pay off loans. That could be a sign of a of a debt problem. And of course, if you're borrowing money or using credit cards just to take care of your basic necessities, and again, we're talking about basic necessities to buy food, to keep the lights on, to put gas in your car.

00;10;24;22 - 00;10;42;13

Kim (Host)

Those are basics. We're not talking about entertainment or trips. You know, those extra things just add every day. So, Carmen, if someone is listening and they now say, oh, my God, I think I have a debt problem, what are some debt and credit scams that they should watch out for?

00;10;43;06 - 00;11;04;14

Carmen Million

Well, one of the first ones we're aware of is the debt relief scams, and that's where consumers are targeted. That has a significant amount of credit card debt. And they receive a call, in most cases out of the blue that somebody is going to help them negotiate their debt down. I think most consumers are just confused about what these companies are actually offering.

00;11;04;27 - 00;11;31;16

Carmen Million

If it's a debt relief, a debt relief company, then they're telling you that they're going to help your debt go away. And that's not always the case. Another thing is a debt settlement scam where they convince consumers in order to get your creditor to work with them, that you need to start making payments and or you have to pay a substantial amount of money upfront, basically to pay them so that they can pay your creditors.

00;11;32;03 - 00;11;56;15

Carmen Million

A debt consolidation offered by predatory lenders you know, failure to disclose information, disclosing false information, risk based pricing and inflated charges and fees or some of the ways that they work. And, of course, one of those predatory lending scams deal with payday loans. That's where you're borrowing from Peter to pay Paul. And you just can't ever make the debt go away.

00;11;56;23 - 00;12;08;01

Carmen Million

And actually you end up in worse shape than you started. And in most cases that it negatively affects your credit, which doesn't improve anything for you. So it makes it worse instead of better.

00;12;08;13 - 00;12;22;20

Kim (Host)

And I know for each of these that you've listed, there are going to be some legitimate opportunities, legitimate organizations that can work with the consumer and help them get out of debt. So what are the red flags that consumers should look for to help identify if it's a scam?

00;12;22;25 - 00;12;42;05

Carmen Million

Well, as I said, the very first thing is if they ask for money upfront, that's the first sign of caution. If they guarantee that you can they can make the bad credit go away. In fact, we've had consumers that have contacted us and were told that they would get a new Social Security number. So that they can start their credit over fresh.

00;12;42;06 - 00;13;04;09

Carmen Million

Those are warning signs. Any time they they promise you something that sounds too good to be true. If they tell you that they're going to clear it up and they they guarantee that your credit will go away and that they will improve your credit score. Those are all warning signs There are legitimate companies out there. But you have to be careful.

00;13;04;09 - 00;13;28;04

Carmen Million

You have to be your first line of defense. You have to protect yourself. You can always contact the Better Business Bureau will get you a list of those companies and will also give you information on companies before you actually get involved. But again, the two warning signs we say is if they ask for money upfront and if they tell you to quit paying your creditors, those are two of the biggest warning signs that you're about to get involved in, something that's not ethical.

00;13;29;14 - 00;13;50;03

Kim (Host)

That's some good information. I mean, in spite of the numerous debt scams that exist, like you said, there are legitimate programs and resources and I mean, a great place for our listeners to start is going to be right here at Neighbors Federal Credit Union. I mean, we have credit union certified counselors that can provide legitimate options for eliminating debt I mean, this is a place that's here, local.

00;13;50;03 - 00;14;12;24

Kim (Host)

You can come and sit down face to face and talk to somebody. Or it may be that you even know the representatives within the branch. So at least you know you're talking to somebody. It's real. That's not a scam artist. You know, one of the immediate benefits of seeing a financial counselor is that the services are free and I think that's, you know, one of the red flags with the scam artist is this there's going to be some money involved.

00;14;13;01 - 00;14;32;00

Kim (Host)

And generally they are pressuring you to pay pay. Now, they want you to give out your information over the phone with the credit union as services are free. And so basically it's a win win. We're here to help you. And obviously, whatever information you take away from that session, it is free. It is only thing is going to cost you is the time.

00;14;32;09 - 00;14;53;00

Kim (Host)

You know, our goal is to help members achieve financial wealth. I'm sorry, financial wellness Additionally, we are for personal loans. We have home equity loans. We have a list of products that can help members maybe consolidate their debt, but just find that right product that fits them without the pressure of. Is this right for me? How much is this going to cost me?

00;14;53;01 - 00;15;19;15

Kim (Host)

Is this even legitimate? Will I have regrets? You know, down the line? I mean, the credit union is here for our members. And like I said, we are ready to serve them. We have those programs. I mean, we've got credit cards with 0% interest you know, introductory rates. There's just, you know, a list of them. Another resource we have through the credit union, this green path, financial wellness and Green Path offers a variety of services, including those debt management plans.

00;15;19;15 - 00;15;42;21

Kim (Host)

They have a legitimate plan. We've been partnered with them for almost five years now. And I've seen some of our members that needed this particular type of plan partner up with them and be able to get out of debt, you know, and not lose money and not have to worry about scams. So you know, for our listeners out there, go to our website, neighbors FCU dot org, look up the different options.

00;15;42;21 - 00;16;03;07

Kim (Host)

You can contact us, you know, online, you can contact us by phone or even come into the branch because we're here to help you. And definitely there's no scams. So if you don't have any debt of your own and you have questions about an offer to eliminate debt or reduce payments, you know, contact the credit union scams are not always to identify.

00;16;04;03 - 00;16;22;13

Kim (Host)

There was a lady as a matter of fact, I always tell this this particular story, because this is one of the reasons I became so passionate about financial counseling. She walked into our branch. This was well over ten years ago, and she wanted to get a second checking account. And of course, back then, you know, we didn't want to have our members get a second checking account because there was a fee.

00;16;22;13 - 00;16;44;07

Kim (Host)

Your first checking account may have been free, but the second one always had a fee. So just kind of questioning her, you know, why do you need the second checking account? Is there a different product we can offer for you, maybe without a fee that we can help you? So long story short, what I discovered was this particular member had received a call or talked to a company that had promised that they could reduce the interest rates on our credit cards.

00;16;45;05 - 00;17;05;26

Kim (Host)

And so she had signed up with them and they were going to be deducting a payment from her account. So after a little further conversation, deep diving, what I realized is that she had been involved with a debt relief scam. And the only thing that really they conveyed to her was that she would lower interest rates. They didn't tell her about the fact that she'd have to stop making payments.

00;17;06;03 - 00;17;25;21

Kim (Host)

She'd have to be delinquent and actually run her credit because at the end of that particular conversation or this session, I realized this woman had excellent credit, A-rating. Right. She was just looking to reduce her interest rates. I mean, so think about our listeners out there. You've got some credit card bills you're paying them on time. Life is good.

00;17;25;21 - 00;17;44;28

Kim (Host)

But if you could reduce your rate maybe from a double digit to a single digit, would you want to do it? I certainly would. That would catch my attention. And that's what caught her attention. But when we did our investigation, we realized it was a scam and we were able to help her avoid it, not open that account and make sure she didn't give out her account information.

00;17;45;04 - 00;18;04;03

Kim (Host)

And she actually was able to consolidate those credit cards with neighbors for lower interest rates. So she still walked out a happy camper, but she walked out without being scammed. So they do exist. And whether you have excellent credit or maybe you're on the lower totem pole, you know, those scammers are out there to get you and you really have to be careful.

00;18;04;03 - 00;18;22;06

Kim (Host)

You really, really want to, you know, use those trusted resources you have, like the houses that neighbors to help you out. So not all stories have a happy ending like this one there. So, Carmen, what's the best advice you could give someone to protect themselves from scam artists if they're looking to get rid of debt?

00;18;22;21 - 00;18;40;16

Carmen Million

Well, Kim, you've made some really good points. And I want to say this. One of the things that we find when we have consumers that have ever either been victims or about to be a potential victim is that they're embarrassed because they have debt. Most of these people have never had debt and they're right in their life. And so they're now they're having to deal with it.

00;18;40;16 - 00;19;00;09

Carmen Million

They don't want to talk to their family members and they don't want to talk to somebody who because they're ashamed. And so what we want consumers to to do, first of all, is be your first line of defense. You have to protect yourself, build a relationship with a local company that you can work with face to face, just like neighbors.

00;19;00;09 - 00;19;26;13

Carmen Million

You want to make sure you can go in, talk to them and build a relationship so that you have confidence in who you're doing business with. Because a lot of these consumers that we get complaints from have received a text or email, a phone call, a lifeline, what they're thinking it is and what happens is they actually give their personal financial information because they're desperate.

00;19;27;07 - 00;19;48;11

Carmen Million

And that's what we want consumers to know. Never give personal financial information out to somebody you don't know that you haven't investigated, that you haven't looked up. And again, you can go to Billboard and look these companies up. Neighbors is one of our accredited members. They're going to be on that list. So you want to make sure that you investigate before you invest.

00;19;48;25 - 00;20;00;00

Carmen Million

Doesn't matter how desperate, how bad the situation is, there is help. But you want to start local, build a relationship with somebody that you know and you can trust.

00;20;00;13 - 00;20;08;06

Kim (Host)

And for our listeners that are thinking, oh my God, it's too late, I've already been scam. If they contact the baby, what can they expect?

00;20;08;16 - 00;20;28;26

Carmen Million

Well, the Better Business Bureau is usually the first line of defense. So what we're going to do is we're going to get involved, try to help them get out of the situation, direct them to somebody who can actually assist them educate them. Because, you know, most consumers who are scammed, we tell them in some cases they may not get their money back, but let it be a lesson.

00;20;29;07 - 00;20;55;18

Carmen Million

So you want to make sure you learn from that experience. But we're going to tell them what not to do, just like we're telling the consumers now, never give personal financial information. The example you gave earlier is a very good example of what I was saying. Anybody it doesn't matter what their education, what their background, what their history is, if the timing is right, if they're in a desperate situation, they may make a bad decision.

00;20;56;03 - 00;21;02;04

Carmen Million

But think about the Better Business Bureau for so we can give you good advice to help you make an informed decision.

00;21;02;25 - 00;21;23;15

Kim (Host)

Awesome information. Carmen, thank you so much for educating our listeners on how to protect themselves against scam artists that that prey on people that are looking to eliminate dead people that are vulnerable, that may just be in a really stressful situation and looking for easy answers. Well, that's going to wrap up our session for today. Stay tuned for the Money Minute.

00;21;26;23 - 00;21;29;02

Carmen Million

But I love that.

00;21;37;15 - 00;21;57;14

Kim (Host)

Promise to get something for nothing or a big red flag when it comes to your finances. Don't ignore your intuition to avoid getting caught up in the debt scam. You should protect the money you have by contacting a certified credit union financial counselor at Neighbors Federal Credit Union, you can find the right product, a service that fits your situation.

00;21;57;20 - 00;22;18;21

Kim (Host)

Just by having that conversation, contact the Better Business Bureau if you suspect you've been contacted by a scam artist or to identify a legitimate organizations that can help you get the money you need to pay down that debt. And finally, if you don't have an emergency fund to cover rainy days today, is a great day to start a savings account.

00;22;19;01 - 00;22;33;06

Kim (Host)

It will go a long way to help you save the money you want. And finally, check out neighbors fcu dot org slash for latest financial education. To learn more on how to use the money you have to make the money you need and save the money you want.