Debt-relief pitch only benefits the scammers
Hustle can expose your personal data and bank accounts to years-long abuse
Deborah DeMack found it rather ironic.
DeMack, a New Mexico consumer and bankruptcy lawyer, was recently hit up by a bogus debt relief service. In fact, she says she’s often a target because she is on some sort of nefarious list.
This time, she answered the phone because the call appeared to be coming from a state government phone number. Most times she does not answer, because she knows all about debt relief scams.
DeMack represents clients who have fallen victim to such schemes, which are marked by promises of consolidating debt, reducing payments or providing some “fabulous interest rate.”
DeMack, who has worked in the California and New Mexico attorneys general offices, says people can be vulnerable to such scams when they’re facing sizable debt and they’re trying to avoid bankruptcy because they are fearful or ashamed.
“A common theme is you pay them money upfront to set up a program,” DeMack says. “You pay for a period of time and — this is typical of debt consolidators — they promise that once you pay a sufficient amount they will have a pot of money, your money, and will be in a position to negotiate a settlement. Very rarely does that occur. What they do is hang on to your money. And it can go on for years.”
That’s pretty much what happened several years ago to one of DeMack’s clients, who ended up spending $21,000 to a supposed debt relief company.
The scam went on for over a year, she said. It wasn’t until the client started getting sued by his credit card companies that “he woke up” and realized nothing was getting paid or negotiated with his creditors, as had been promised.
He had signed over authorization to the scammer, meaning all letters from creditors went to the bogus debt relief company and not him — until the suits were filed and he was personally served notice.
DeMack eventually recovered the $21,000, but the client ended up having to spend most of it on attorney fees and other costs.
The secondary consequence of debt relief scams, DeMack says, is identity theft.
“I’ve had many clients have their bank account emptied out, because they signed up for a service only to find out they’d been robbed,” she says.
Her advice is to be very skeptical about any phone call from an individual or company with whom you’ve never done business before.
“If you go down that road … and so many people are struggling right now. … they will be asking you for your Social Security card, bank account numbers, credit card numbers. You are handing over the keys to the kingdom to those who are likely thieves.”
And while there are some legitimate debt relief companies, DeMack says, “they will never call you. It’s you who needs to find them.”
If you get a call from the local water utility requesting payment over the phone, hang up.
The Albuquerque Bernalillo County Water Authority is warning that customers are getting fraudulent calls about overdue bills. Especially targeted are Spanish-speakers, the utility says.
“Remember the Water Authority will never call you regarding overdue bills and would never ask for banking or personal information over the phone,” the utility said.
If you have any questions about your water or sewer service, call 505-842WATR (9287).