As Americans continue to battle rising inflation and high interest rates, credit card debt is reaching historic heights.
Approximately 54 million people have carried credit card debt for the last year or more, according Bankrate, and the Better Business Bureau is warning those in debt to think twice before reaching out to a credit repair agency.
A newly released BBB study finds some of these services can be deceptive.
“Americans are trillions and trillions of dollars in debt, and they feel like they have nowhere to turn,” Kristen Johnson, director of communications for the Better Business Bureau Serving Connecticut, said.
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While it may be tempting to seek help, the study warns consumers to use caution when engaging with credit repair companies.
“They're offering big empty promises,” Johnson said. “Better Business Bureau noticed nationwide, this pattern of complaints from consumers who said that they had engaged with businesses who use deceptive practices, or outright scams to take money from them, and really left them worse off than they already were.”
The BBB tracked complaints about the credit repair and debt relief industry for three years, from June of 2020 to June of 2023. They recorded 12,700 complaints nationwide and received 1,607 testimonials on the BBB Scam Tracker online tool. The BBB reports a total of $2.4 million in losses for consumers.
Local
More than 100 of the complaints came from people in Connecticut. One woman claims a financial loss of $8,700 while working with a California company called Litigation Practice Group.
On the BBB Scam Tracker tool, the consumer writes that she contacted the company to look into debt that mounted when someone else opened up credit cards in her name. She claims that despite paying fees, she has not been able to get help online, on the phone or over email.
“My portal online has been deleted. You cannot schedule a phone call back it says that they are all taken try back next year. I've emailed multiple times for my refund with no response. And when you call the phone just hangs up on you,” the Connecticut resident wrote.
NBC Connecticut also got a busy signal when calling and Litigation Practice Group did not respond to an email requesting comment.
Another Connecticut woman writes on the BBB Scam Tracker that when she contacted a Texas company called Mycredit.guru she not only lost $900, but her personal information was compromised.
“The implication of handing over her personal information has had such an effect that two years later, she's still having issues,” Johnson said. “Just this week, she had to take out a new debit card because her information was stolen again. She believes her social security number is on the black market.”
NBC Connecticut’s calls and email to Mycredit.guru have not been returned at this time.
The BBB said no company should ask for upfront fees or bank information. They also should not claim to have special access to loan forgiveness, or insist taxes need to be paid before debt is settled or consolidated.
“These companies come in, and they offer to fix their credit scores overnight. And unfortunately, that's just not possible. These things take months, if not years. And so people are being taken advantage of,” Johnson said. “We're talking about people who were already financially vulnerable, who didn't have any extra money to like to lose.”
The BBB adds that consumers can handle a lot of credit issues on their own by calling the credit bureaus to fix any mistakes on their accounts, or working out a payment plan directly with a creditor. They note that some nonprofits can also help with credit counseling.
