BBB Warns: Don’t be Duped by Auto Loan Modification Services

  
     
July 15, 2010


Contact:

Sue McConnell, Sr VP

216.623.8964 x 109

                        sue@cleveland.bbb.org

 

For Immediate Release – June 30, 2010

 

 “We can help you lower your monthly car payment by as much as 50%!”

“You don't have to settle any longer for high car payments.”

“We have experienced professional negotiators standing by to assist you with getting help with your auto loan.”

 

A new twist on home loan modification offers is targeting consumers who need help keeping up with their car loan payments. Advertisements for auto loan modification services have surfaced on TV, the Internet, and even on Craigslist. 

 

Similar to claims made by home loan modification companies, auto loan modification services charge advance fees and promise to work directly with lenders to negotiate reduced interest rates and lower monthly payments.  Consumer complaints, however, indicate these services often do not live up to their promises. 

 

An unemployed Cleveland student was looking for help with her $420.00 per month car payment when a television advertisement led her to Auto Relief Group (ARG), a Florida company.  ARG promised to lower her 13% interest rate to 8% and extend the loan which would result in a reduced monthly payment of $290.00. They also claimed they often worked with Honda Financial Services (Honda), her lender.  She provided her bank account information and agreed to allow ARG to take a one-time advance fee of $298.00 from her checking account.  When she didn’t notice any reduction in her monthly payment after a couple months, she contacted Honda directly and learned ARG had never contacted them.  In addition, Honda said they would not work with a third party in that manner.  She confronted ARG and was asked to pay an additional $100 if she wanted them to call Honda on her behalf.  “When I asked what I had paid $298 for”, she told BBB, “I was told that paid for the report they had sent to me. “ 

 

The report was ARG’s “Options Report”. Consumer complaints indicate the information in the report is nothing beyond what the consumer could receive for free by calling their lender (amount of loan, current interest rate, balance, etc). The Cleveland woman was also surprised to learn that ARG had made two additional $298 withdrawals from her account without authorization.  She disputed the withdrawals with her bank and the funds were ultimately returned to her account.

ARG has an F rating with Better Business Bureau mostly due to 145 consumer complaints received since April, 2009.  The complaints primarily involved ARG’s failure to get loan payments reduced.

 On June 22, 2010, the Florida Attorney General filed a lawsuit against ARG charging the company with deceptive and unfair trade practices. The action alleges ARG, its subsidiaries and owners falsely advertised they could reduce car payments by 50 percent.  According to the action, ARG claimed to have relationships with lenders even though lenders had previously notified ARG they would not negotiate loans.  At this time, the company’s assets are frozen and a receiver has been appointed. The Florida Attorney General is seeking restitution for consumers and civil penalties.

BBB expects many others companies to take ARG’s place. With many consumers tackling unemployment and unable to handle existing debts, auto loan modification is being touted as a promising business opportunity with a rapidly growing market. It is easy to find advertisements online from companies selling professionally produced commercials used to generate leads, software and other materials for anyone interested in starting their own loan modification business.  

The BBB recommends that consumers follow these tips:

Ø      Get documentation from the company that discloses the services they will provide, their refund policies, and any guarantees of success.

Ø      Contact your lender directly to determine if they would be willing to negotiate with a third party.  Many lenders have indicated they do not work with loan modification services.

Ø      If the service requires you to stop making your car payment, you risk having your car repossessed. Failure to make payments can also negatively impact your credit report.

Ø      Do not give the company access to your bank accounts or agree to wire funds for advance fees. 

Ø      Check the company’s BBB rating at cleveland.bbb.org.

Ø      If you have been victimized by a car loan modification service, contact BBB to file a complaint.  You can file online at cleveland.bbb.org of by calling our offices (216-241-7678).