Debt collections scams are on the rise, and it was recently announces that nearly 95,000 victims will split an estimated $4 million US dollars in damages. The Federal Trade Commission is cracking down on these scams, which seem to be more prolific these days. From small schemes, to the recent Honda credit repair scam, merchants and consumers need to heed anyone who claims to fix their credit or credit score. Legit debt collection merchants will not promise you anything, but rather give you estimated solutions. No legit company should promise you that your credit score will rise overnight, or will wipe your credit report clean. These things are not possible, and this should be your first sign that a company is trying to scam you.
While these scams are on the rise, there are still legit credit repair companies and debt collections merchants around. The names are interchangeable, and you should do your research before visiting a company. While online reviews are great, sometime they can be bought, or “stuffed”, by having friends and relatives good reviews, even if they have not used the company’s services. A good place to look is BBB, or the Better Business Bureau. The BB gives ratings to all of its members – ratings that cannot be bought. This is the most reliable way to gauge the reliability of the company and its services.
These scams can also wreak havoc on existing debt collections merchants. Scams can put a damper on the whole industry, and it can make it tough to do business. While opening a business might be easy, finding a debt collections merchant account is tough. Few offer this service, due to the “high risk” nature of the industry. This label is placed upon companies for many reasons, but in the case of debt collections merchants it is because the industry has a higher risk of fraudulent activity. Because of this, processing fees can be higher, and accounts more fragile. Be sure to research debt collections merchant accounts before signing on with one, as this is one of the most important investments you will make for your company.