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Debt Scams: "Another Day Older and Deeper in..."

Bogus Debt Elimination Scams Create More not Less Debt

By Florence Klein
Florence Klein
Courtesy of Florence Klein

Financial demands brought on by today's economy have many people, young and old, looking for ways to lessen their unhealthy debt load. Their search for debt relief opens the door for fraud scams that usually leave the consumer, like the Sixteen Ton coal minor, "deeper in debt."

This week the Federal Trade Commission stopped operations of a debt relief operation alleged of luring debt stressed consumers deeper into debt. The FTC complaint claims Debt Relief USA and principals James Wojcik, Valerie Leath, Kelly Reilly and Alvin Bell made deceptive claims to mislead consumers and collected thousands of dollars in upfront fees without providing any debt relief.

Consumers were told they could eliminate 40 to 60 percent of their credit card debt and be debt free in two to four years according to the FTC complaint. Claims of becoming debt free can be hard to resist if you are watching your budget and find yourself climbing ever closer to you personal debt ceiling.

The settlement against Debt Relief USA, Inc., James Wojcik, and Valerie Leath bans them from doing further business or marketing any financial products and services. Litigation continues against Kelly Reilly and Alvin Bell the other two principals of Debt Relief USA.

If you find yourself or someone you know looking into debt relief or elimination, be sure to check out any company or individual before you start doing business with them. At the very least you need to check with the Better Business Bureau to see if there are any complaints filed against them.

What warning signs should you watch for if you are looking for short term or credit card debt relief? Raise your red flag and get outside help if anyone:

  • tells you to stop paying your bills
  • asks you to pay them or someone other than your creditors
  • instructs you to stop talking to your creditors
  • asks you for pay for debit relief services before you receive it
  • charges large monthly service fees
  • tells you your debt will be paid off for cents on the dollar
  • claims they can remove negative credit information from your credit report
  • offers you a "new government program" to get you out of debt
Following these cautions and getting all questions answered before using a financial service for debit elimination should keep you safe.

More information on dealing with debt is available on the FTC's Money Matters web site.

To file a complaint or get free information on consumer issues, visit the FTC or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261 or watch a video, How to File a Complaint.

Published August 24, 2011

Florence Klein

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