U.S. regulators temporarily stopped a credit card debt relief company that allegedly scammed customers. They charged upfront fees and made phony promises about shrinking or eliminating credit card debt.

According to the Federal Trade Commission’s November 2022 lawsuit involving ACRO Services and other companies, the alleged scammers claimed they could pay off customers’ credit card debt.

FTC warns of scammers in the credit repair and debt relief industry. It is important to thoroughly investigate any debt relief agency before you make a decision to work with them. Also, be aware of scammers who may try to exploit your financial problems.

The key takeaway: Learn how to spot scams if you are considering debt relief.

Do you need a debt relief agency?

The first step in getting your finances on track is to reach out for debt relief. You may be able help yourself by finding a legitimate debt relief program. This program’s goal is to reduce your debt by offering forgiveness or other payment options. There are legit programs, usually associated with government agencies. However, paid services for debt relief or settlement can often be scams.

It’s a smart idea to do some research on your own before you look into a paid debt relief plan.

Beware of debt relief scams by companies promising to pay upfront and asking for money upfront.

Signs that you are being duped into debt relief

You might consider getting help if you are behind in your bills. Be wary of unsolicited offers that promise to pay off or settle your debts. There is no way to guarantee creditors that you will forgive your debts.

Avoid debt relief programs that promise…

  • Charges upfront fees A debt relief company cannot make you pay an upfront fee before they do anything to reduce your debt. Although some companies may charge a monthly fee instead of one lump sum, it is illegal to make an upfront payment.
  • Scammers might promise to erase negative credit information from your credit report. Scammers could tell you to dispute credit reporting information, even if it is accurate. The truth is that no one can legally remove inaccurate negative information from credit records. This can only be done with time.

Getting past credit troubles

Your credit score should improve as you tackle your financial problems. It will take time and effort. These are some practical ways to make long-term financial progress.

  • Check your credit reports frequently. Each of the three major credit reporting agencies — Equifax, Experian, and TransUnion — must give you a copy of your credit report free of charge at least once every twelve months. Credit Karma allows you to view both your Equifax credit reports and TransUnion credit reports at no cost. You should check for errors. They can prevent you from receiving favorable loan terms, or even from getting credit.
  • Pay attention to your finances. Make sure you pay your bills on time. Also, pay off your loan or credit card balances promptly. A credit-builder loan can be a good option if you are trying to improve your credit score. This allows you to make regular payments and receive the funds once the loan has been paid off. Credit Builder by Credit Karma Money ™ might be a good option. Keep in mind, however, that credit builders products may not be accessible to all and can negatively impact credit depending on payment history and other factors.