BBB: use caution when doing loan consolidations or credit repair

  
     
August 03, 2017

Be cautious if someone calls offering to improve your credit and consolidate debt, according to Better Business Bureau Serving Acadiana.

There are many honest, reputable companies looking to assist those in financial need, but there are also those looking to take advantage of those already in financial distress.

One such business is Financial Freedom National Inc, which was recently halted by a federal court at the request of the Federal Trade Commission and the State of Florida. The business is being accused of being a massive phony debt relief operation that bilked tens of millions of dollars from financially strapped consumers, including the elderly and disabled.

The business is also accused of operating in its home state of Florida without the proper licensing.

According to BBB files, Financial Freedom National Inc. and 10 affiliated companies allegedly convinced people to pay hundreds or thousands of dollars a month by falsely promising they would pay, settle, or obtain dismissals of consumers’ debts and improve their credit.

Over time, victims found their debts unpaid, their accounts in default, and their credit scores severely damaged. Some were sued by their creditors while others were forced into bankruptcy.

Furthermore, the defendants allegedly falsely claimed non-profit status to appear more credible and legitimate. The defendants then promised consumers guaranteed debt consolidation loans for tens of thousands of dollars with attractive interest rates and lower monthly payments.

The complete BBB Business Profile can be found at: https://www.bbb.org/south-east-florida/business-reviews/loans/financial-freedom-national-in-pompano-beach-fl-90121381.

Once consumers agreed to the purported loan, the defendants almost immediately debited the consumers’ bank accounts for an initial loan “repayment” or a processing fee then kept debiting consumers’ bank accounts each month in amounts ranging from $200 to $1,000 or more.

The FTC and Florida charge that the defendants, despite taking these monthly payments, failed to extend consumers the promised debt consolidation loans.

BBB offers the following tips to avoid being taken by a debt relief or credit repair scam:

  • Start With Trust®. Always check with BBB at bbb.org before doing business.
  • Federal law says consumers should never have to pay in advance for credit repair or debt reduction services. Payment should be rendered after services are provided.
  • If a debt reduction or credit repair service tells you not to contact credit bureaus directly, this is a huge red flag. Walk away!
  • Never take advice that recommends any action that seems illegal, such as creating a new credit identity. It is a federal crime to make false statements on a loan or credit application, to misrepresent your Social Security Number, and to obtain an Employer Identification Number from the IRS under false pretenses.
  • Know the terms of the service offered. The Telemarketing Sales Rule calls for Debt Relief companies to disclose the fees and terms, including how long until the company makes an offer to each creditor, how much you need to save before an offer is made to a creditor and the possible negative consequences of stopping payments to creditors.

 

“Look for the Seal” and Start with Trust®.BBB Serving Acadiana is a private non-profit organization. BBB strives for a trustworthy marketplace by maintaining standards for truthful advertising, investigating and exposing fraud against consumers and businesses. 

Please contact Better Business Bureau at (337) 981-3497 or bbb.org 24 hours a day for information on businesses throughout Norh America. Consumers can also sign up for our free BBB “Scoop” eNewsletter by visiting bbb.org and clicking on the “Programs & Services” tab.

BBB Serving Acadiana covers the parishes of Acadia, Evangeline, Iberia, Lafayette, St. Martin, St. Landry and Vermilion.