Wednesday, March 26, 2008

Watch out for Debt Consolidation Fraud

The FBI website has some information on a scheme to defraud people looking for consolidation loans.

On 10/17, the manager of Amansco Credit Services was found guilty of conspiracy to commit wire fraud… that is, of conspiring to commit a massive telemarketing fraud between two companies — Franklin Credit and Amansco Credit, which billed customers for over $2.7 million in 1997 and 1998. Before the FBI shut the operations down, over 5,000 customers were defrauded. The manager’s conviction follows earlier guilty pleas to the scheme by eight sales people from Franklin Credit.

What was the scheme? Promised debt consolidation. For a mere $295, you’d receive a low interest debt consolidation “loan” from Franklin Credit to pay off your creditors. Except there was no loan — you just got turned over to Amansco Credit… and it only provided a bill-paying service.

This wasn’t a small operation. There is big money in debt consolidation, so it attracts people who are looking to make money fast. Fraudulent schemes can range anything from outright stealing people’s money like this company to charging higher fees for legitimate service.

The FBI site suggests that the following signs are good indication that you should just walk away:

Act now or the offer won’t be good. You’ve won a free gift/vacation/prize… but you have to pay for postage and handling/ taxes/other charges. Just send money, give us your credit card number, or… we’d be glad to pick up your check by courier. We’re a well known company — don’t delay by checking us out. You can’t afford to miss this high-profit, no-risk offer!


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