Debt Scams: Credit Card Rate Reduction Programs Sued

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Have you ever picked up the phone to find one of those automated telemarketing services stammering on about how their company is prepared to offer you a once in a lifetime chance to reduce massive credit card rates? If you answered yes, you’re certainly not alone. These calls have been flooding the phones of unsuspecting consumers for years. In fact, things have gotten so out of hand with this particular debt reduction scam, the Federal Trade Commission (FTC) finally stepped in.

Last year, the FTC decided to crackdown on credit card rate reduction scams. They filed suit against three telemarketing firms who were “robocalling” anyone listed in the phonebook. The three companies sued by the FTC were AMS, Rapid Reduction and PDMI. Their “claim to fame” was that they could offer consumers “slashed rates” on their credit cards, but only after you paid them a handsome sum of money upfront. On May 20, 2012, a federal judge sided with the FTC, ruling that each of the three credit card telemarketing firms had to shut down operations.

Continuing their mission to put an end to the credit card rate reduction fraud, the FTC added another eight defendants to the case last week. They filed an amended complaint against the firm Treasure Your Success (TYS). According to the FTC, TYS made robocalls promising to lower credit card rates in exchange for an upfront fee, some of which ran as high as $1,593.93!

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The Debt Reduction Scam

The debt reduction scam promising to lower your credit card interest rates has been around for a long time. In fact, the Better Business Bureau began receiving complaints for this scam during the summer of 2007. They noticed a sharp increase of complaints in the last half of 2008, then a mysterious lull. However, a fresh batch of consumer complaints began to flood the BBB in the early part of 2010, which led to the alert being issued by the FTC.

So, how does this particular debt scam work? Well, your phone rings and an automated voice on the other end begins to make extremely vague claims about saving you tons of money, so long as you are in serious credit card debt. By the end of the recording, you’re told to call a certain toll-free number if you are interested in saving thousands of dollars. Once you dial the toll-free number, the game begins.

In a typical credit card reduction scam, let’s say you have two cards with varying interest rates of 12 and 16 percent. The company promises to “negotiate” a massive reduction in those rates for you, getting your APR down to between 4 and 8 percent. You’re then promised a savings of anywhere from $3,000 up to $30,000, depending on the amount of debt your cards are carrying. The company also assures you that you can pay these cards off, free and clear, up to five times faster than normal by using their services.

Now for the clincher. After the scrupulous salesperson has wowed you with all the savings their company can provide, they inform you that, in order to participate in this wonderful program, you have to pay an upfront fee. While most fees hovered around $600 to $1000, others were much higher. The scammers then ask for your credit card information, including the customer service number on the back of your card. Your already stressed credit card is charged the scammer’s upfront fee, then the salesperson places a three-way conference call using the card issuer’s customer service number. On that call, the salesperson makes a request with your card’s customer service representative to grant you a lower interest rate on the card. And that’s it. That’s the negotiation service that these scammers offered thousands of people who were simply struggling to get out of debt.

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Considering Bankruptcy

If you’re in deep credit card debt or you’ve seen card interest rates skyrocket as a result of late payments or over-balance fees, you are likely a target for card reduction scammers. These services never deliver the relief promised. In fact, they do nothing but leave you deeper in debt.

Instead of falling victim to these debt scams, take charge of your financial future by contacting an experienced North Carolina bankruptcy attorney today. During your initial consultation, you’ll find out how Chapter 7 or Chapter 13 bankruptcy can truly help you find your way out of debt and start with a clean slate.

Dedicated to helping residents of North Carolina find the best solutions to their debt problems. Don’t waste another day worrying about your debt. Call +1-833-627-0115 today to schedule a free initial consultation to discuss your bankruptcy options.