Freedom Debt Relief: Scam Or Not?
Freedom Debt Relief Scam Concerns
Scam Detector has been receiving many emails lately about a potential Freedom Debt Relief Scam. As a result, we will address the issue and give a verdict. We will also look at the official Freedom Debt Relief BBB profile, where there are over 380 complaints about the company. We will start by checking out the Freedom Debt Relief reviews. Let’s dive in.
Most of us have faced debt at some point or the other. Often when you hear of debt relief, you are naturally eager to know more. This could come as a phone call, email or you may come across it on a website. Freedom Debt Relief does most of these types of approaches.
However, whenever you hear about the ‘debt relief’ concept, one must proceed with extreme caution, no matter how tempting it may seem. Debt relief scams will actually dig a deeper hole for you and cause more trouble than help – same as the other regular financial scams. The immense number of complaints against Freedom Debt Relief raised a lot of doubts about the company.
Freedom Debt Relief BBB Reviews
There are close to 400 complaints on the official Freedom Debt Relief BBB profile. From these, only 140 were closed in the last 12 months. Therefore, many readers expressed concerns to us about the risk of a potential Freedom Debt Relief scam.
The company is not a scam in itself. It does exist but has a B rating on the BBB platform, a ranking that’s not encouraging enough for people to trust. Consumers complain about Freedom Debt Relief that they charge an arm and a leg while the services’ quality is questionable.
We recommend you to read all the Freedom Debt Relief reviews. Now let’s look at the general characteristics of a debt relief scam.
Debt Relief Scam: How It Works
Some genuine organizations can help you get out of debt. These companies can advise you on how to manage your money or provide you tips on budgeting. They can negotiate with creditors to grant you concessions and develop a plan to save money each month and ultimately help you pay off your debt. Freedom Debt Relief works by these rules, but it seems like they are not at the top of their game.
Signing up with a legitimate debt relief company and using their services may help you to lower your monthly payments, and you may end up paying a lesser amount than you initially owed.
If the results are positive and you can lower the amount that you owe to your lenders, you will have to pay the debt relief company a fee each month for their services.
However, scammers offer fake guarantees and promise to lessen your debt or get you out of it altogether. One way to differentiate between a genuine and a real company is that a fraudulent company will ask you for payment before you do before they do anything for you. Asking you for a lump sum of the price before they do any work is actually illegal and a major red flag that you should look out for. Genuine and legitimate debt relief companies will not charge any fee for the services but will charge you only after proven positive results.
The More Credit Problems, The Most Effective Fraud Is
Debt relief scams are mainly targeted at financially distressed consumers who have significant credit problems. They encourage consumers to purchase services, and falsely claim that any negative information will be removed from the consumers’ credit card reports even though the information could be accurate.
One of the Freedom Debt Relief BBB page complaints was that the company puts in fine print critical information that should be told to the customer upfront.
Some debt relief scam companies will take your money and disappear, while others will make you promises while collecting payments from you at the same time. This will make you fall into further debt.
A significant example is student loan debt, which scammers to collect money and fees with promises of enrolling students into the government debt forgiveness program. Auto loan scams are another example of fraudulent debt relief companies claiming to health consumers reduce their monthly car loan or lease payments.
Debt relief scams are designed in such a way to target customers with major credit card debt. Customers are fooled into believing that the debt rescue company will negotiate with creditors to entirely settle or lessen their payment obligations. Most times, debt relief companies will charge you a large sum of money that you will have to pay up-front but will not help you reduce or settle the amount of debt you have.
When it comes to legitimate companies, you need to be careful as well. For instance, there could be certain risks. Some companies might ask you to stop paying your debt in the hopes that the creditors will be compelled to offer a reduction. This may work, but it may not either. This is because there is no obligation for creditors to provide a reduction or settle the debt.
Your credit card company will continue to report late or missing payments to the credit bureau, which will negatively impact your financial situation. Your interest rates could keep increasing, and this could have a significant impact on your credit score. According to the FTC, even legitimate debt relief firms don’t explain the situation correctly to the consumer.
Debt Relief Scam: Warning Signs
Whether you deal or not with the Freedom Debt Relief, you need more information when it comes to this industry.
It may be challenging and confusing for some to differentiate between genuine debt relief organizations and fraudulent ones. This is because scammers are experts in making their fraudulent company appear very similar to the legitimate ones. But here are some tips that you can keep in mind and look out for warning signs and red flags to spot the difference between the two:
- Beware of a debt relief company that asks for payments before they help you settle any of your debts. As mentioned earlier, a legitimate company will only ask for payments once results are seen. As soon as a debt relief company asks you to pay a lump-sum before they have actually begun working on your case, you can be sure that it’s fraudulent.
- The company tells you that you should completely cut off all connections with the creditors. Cutting off communication with your lenders can actually have an adverse impact, and you will find yourself in a situation worse off than what you were before.
- The company makes you specific promises. For example, they may tell you that they can reduce your debt by a specific period. No debt relief company can provide any guarantees like these.
- When you ask the company for further information, you cannot provide any details until you provide information about your bank balance and credit card information. This is a very obvious red flag, and you will immediately know that this company is trying to scam you.
- Do not fall for web advertisements, emails, and phone calls that you get from people claiming that they can help you solve your debt issues.
How to Avoid Debt Relief Scams
The Federal Trade Commission advises consumers to take a look at the pros and cons of using debt relief agencies to sort out their financial issues and recommends that they should take a look at other options as well. Here are some practical ways that you could use to avoid a debt relief scam:
- Before signing up with any debt relief company or service, always review and check their history. You can always check online or contact your consumer protection agency and state’s general attorney to see if reviews of the company. This is a guaranteed way of finding out if any unlawful activity is associated with the company whose services you want to hire.
- Read any disclosure requirements for any debt settlement company. Make sure that they include all of the explanations for the fees, conditions of service, and provide an estimation in regards to how long it will approximately take to settle your debts. They should also be clear about the risk of stopping payments to your creditors.
- Always be skeptical of claims that a new government program or a change in the law can claim to reduce, cancel, or forgive credit card debt, auto death, student loans, and other liabilities.
- Read the official profile of the company you are dealing with on the Better Business Bureau‘s website, just like the case of Freedom Debt Relief.
- Do not pay any debt relief company or credit card counseling service fees in advance, even if they may be termed as voluntary contributions.
- Please do not allow any company to consider you a client and enroll you into their debt relief program. First, review your debts and financial situation with you.
- No company can ever ensure that it will reduce your debt or stop collection calls and lawsuits. You should not believe in any guarantees and promises.
- No company and ever get off information about your negative credit history. Data on delinquency and defaults will always remain on your credit report for a minimum of seven years.
- Always consider other options to deal with debt. For example, you can negotiate and speak directly with your creditors, or you could also opt for a non-profit credit counselor.
The Federal Trade Commission has been able to bring many of these debt relief scammers down. They have also formed partnerships with several states to bring additional lawsuits.
In 2010, the FTC also amended its Telemarketing Sales Rule. This way, consumers who were seeking debt relief services such as debt settlement or credit counseling were protected. According to this rule, no debt relief company can sell their services over the telephone for any fee. That’s until they reduce or settle a consumer’s debt situation. Debt relief companies are also prohibited from making misrepresentations. They are supposed to disclose any information that the consumers need in evaluating the services they will be signing up for.
On the same token, Freedom Debt Relief recently agreed to pay $25 million to settle a lawsuit filed against it by CFPB (Consumer Financial Protection Bureau). CFPB accused the company of violating the Telemarketing and Consumer Fraud and Abuse Prevention Act, the Telemarketing Sales Rule above-mentioned, and the Consumer Financial Protection Act of 2010. It is probably when consumers started to refer to the case as the Freedom Debt Relief Scam.
If you feel that you’re trapped in a situation that cannot be sorted out, speaking to your lenders may help. They may offer you different options. For instance, some companies will understand your situation and lower your interest rate, or they may extend your grace period.
Other companies will even put you on a program that will help you to reduce your debt. This will save you money and help increase your credit score, and you will not have to worry about anyone scamming you. Also, beware of fake Tax Relief Companies.
How To Report a Scammer
Let your family and friends know about the Freedom Debt Relief article – share it on social media. You can also officially report any suspicious activity to the Federal Trade Commission (FTC) using the link below:
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Meanwhile, educate yourself with some other Amazon fraud-related articles right under this paragraph, so that you know how to stay safe online. Last but not least, when it comes to the potential Freedom Debt Relief scam, use the comments section below to share your thoughts.
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