Start My Answer

Debt Settlement Scam

Sarah Edwards | March 07, 2023

Sarah Edwards
Legal Expert
Sarah Edwards, BS

Sarah Edwards is a professional researcher and writer specializing in legal content. An Emerson College alumna, she holds a Bachelor of Science in Communication from the prestigious Boston institution.

Edited by Hannah Locklear

Hannah Locklear
Editor at SoloSuit
Hannah Locklear, BA

Hannah Locklear is SoloSuit’s Marketing and Impact Manager. With an educational background in Linguistics, Spanish, and International Development from Brigham Young University, Hannah has also worked as a legal support specialist for several years.

Summary: Before enrolling in a debt settlement program, make sure it’s legit. Illegitimate debt settlement companies can cost you thousands of dollars and destroy your credit. SoloSettle is a trusted service that can help you settle a debt for good on your own—no scams involved.

Scams are everywhere these days. Whether you end up on a robocall list or receive unwanted, fishy-looking emails, there is no end to the lengths scammers will go to to get between you and your pocketbook.

Unfortunately, scammers often use debt settlement and relief to target those in dire financial straits. They prey on a consumer’s vulnerability, trying to convince them they can repair their credit, eliminate their debt, or reduce their credit card balance.

Let’s consider a debt settlement scam example.

Example: Suzy Q is drowning in debt. She owes $10,000 to her creditors, but she’s lost her job, so she can’t make payments. Suzy Q sees an ad for Get Rid of Creditors, a company that claims it can eliminate all debts. She contacts the company and provides her information. It tells her she’ll be free of debt if she pays $1,000 for its services. Suzy Q agrees. Get Rid of Creditors takes her money and disappears.

The example shows how debt relief companies can scam people struggling with their finances.

The Federal Trade Commission (FTC) oversees consumer protections for financial services like debt settlement. It investigates potential violators of federal laws concerning financial services and takes action against them.

The FTC publishes a list of scam companies and the actions it has taken against them. To understand these scams, look at these recent debt settlement and debt relief violations. But first, let’s discover why SoloSettle is a great option for debt settlement.

Settle with SoloSettle

Make an Offer

Settle debt on your own with SoloSettle

SoloSettle, powered by SoloSuit, is a tech-based approach to debt settlement. Our software helps consumers send settlement offers to creditors and debt collectors, kickstarting the negotiation process, until an agreement is reached.

Check out this video to learn more about how to settle your debts:

Now, without further ado, let’s consider some examples of debt settlement scams and red flags to look out for when signing up for a debt settlement program.

BoostMyScore LLC promised customers it would repair their credit scores but used illegal techniques

BoostMyScore LLC came under fire in 2022 for its credit repair scheme. The company told clients they could boost credit scores by filing false reports with the credit reporting agencies. It sometimes even filed fake identity theft reports to remove negative items from its clients’ credit reports.

Some of BoostMyScore LLC’s more egregious activities included encouraging consumers to invest their COVID-19 checks toward the company’s services and offering clients a business opportunity to start their own credit repair services.

As a result of the FTC’s investigation, federal courts shut down the company and froze the owner’s assets. The court will liquidate the assets to compensate former customers.

ACRO Services promised to eliminate or substantially reduce credit card debts

Another recent debt settlement scam involved ACRO Services, which also operated under other names, including American Consumer Rights Organization and Consumer Protection Resources.

The FTC alleged that ACRO Services used illegal and deceptive practices to encourage consumers to sign up for its services. For instance, it employed telemarketers to call consumers and claim they were associated with banks or credit card companies. The telemarketers promised to reduce or eliminate consumer debt within a year.

In its complaint, the FTC also alleges that ACRO charged clients an upfront fee for services, which directly violates a 2010 FTC regulation requiring debt relief companies to settle a debt before charging any fees. ACRO claimed that the enrollment fee would go toward eliminating the balance of the consumer’s outstanding obligations.

While the outcome of the FTC’s debt settlement scam case is still ongoing, federal courts required the company to stop all operations immediately.

Are you facing a debt lawsuit? Settle your debt with your creditor with the help of SoloSettle.

Federal Direct Group defrauds student loan borrowers with upfront fees

The Federal Direct Group, which also did business as Mission Hills Federal and The Student Loan Group, promised clients student loan forgiveness and significantly reduced payments. Following an FTC investigation that found numerous violations, federal courts shut down the company.

The company undertook a few illegal actions, including charging thousands of dollars in upfront fees and obtaining its clients’ student loan log-in credentials. It used the credentials to change consumers’ contact information, which made it challenging for lenders to reach their clients.

Federal courts barred the Federal Direct Group and its owners from operating in the telemarketing or debt relief business. They also implemented a $27.6 million judgment against the company’s owners.

AmeriDebt used deceptive practices with its customers

AmeriDebt was a popular debt relief service in the 2000s that took advantage of customers. It didn’t properly inform customers of fees, which were often significantly higher than customers expected.

Company agents also misrepresented AmeriDebt as a nonprofit organization. The FTC found that AmeriDebt promised to educate consumers on proper financial management skills, which AmeriDebt failed to do.

Clients of AmeriDebt received refunds for payments made to the company. Many also received small damage awards. As a result of the FTC’s investigation, federal courts shut down AmeriDebt and liquidated the owner’s assets.

Manhattan Beach Venture took advantage of student loan borrowers

In a 2019 investigation, the FTC found that Manhattan Beach Venture used deceptive practices to convince clients it could obtain student loan relief or forgiveness. The company charged upfront fees as high as $1,400 for its services and told clients the costs would go toward paying off their student loan debt.

However, Manhattan Beach Venture used the money to connect consumers with a high-interest loan with a third party, Equitable Acceptance Corporation.

Following the FTC’s investigation, federal courts shut down the company and seized its assets. The owners can no longer engage in activities involving debt relief or student loans.

ITMedia Solutions LLC steals personal consumer data and sells it to marketing companies

ITMedia Solutions created hundreds of websites to collect consumers’ personal information, including Social Security numbers and bank account details. The websites promised to connect users with financial service organizations, such as credit card and loan companies.

In a complaint, the FTC alleged ITMedia Solutions sold the data it collected to third-party marketing companies with no concern over how others used it. As a result of the FTC’s lawsuit, ITMedia Solutions paid $1.5 million in civil penalties. Federal courts barred the company from continuing to operate.

Be cautious about debt settlement scams

Be careful when sharing financial details with companies that overpromise. While some companies might help you manage your debt, you need to do your research first.

Don’t send money to any company before thoroughly reviewing its terms and conditions, and make sure the organization has full accreditation with the Better Business Bureau. It’s also wise to check the company’s reviews and complaints.

SoloSettle makes it easy to settle your debt, once and for all.

What is SoloSuit?

SoloSuit makes it easy to fight debt collectors.

You can use SoloSuit to respond to a debt lawsuit, to send letters to collectors, and even to settle a debt.

SoloSuit's Answer service is a step-by-step web-app that asks you all the necessary questions to complete your Answer. Upon completion, we'll have an attorney review your document and we'll file it for you.

>>Read the FastCompany article: Debt Lawsuits Are Complicated: This Website Makes Them Simpler To Navigate

>>Read the NPR story on SoloSuit. (We can help you in all 50 states.)

How to answer a summons for debt collection in your state

Here's a list of guides for other states.

All 50 states.

Guides on how to beat every debt collector

Being sued by a different debt collector? Were making guides on how to beat each one.

We have answers

Join our community of over 40,000 people.

You can ask your questions on the SoloSuit forum and the community will help you out. Whether you need help now are are just look for support, we're here for you.

Get Started

Win against credit card companies

Is your credit card company suing you? Learn how you can beat each one.

Going to Court for Credit Card Debt — Key Tips

How to Negotiate Credit Card Debts

How to Settle a Credit Card Debt Lawsuit — Ultimate Guide

Get answers to these FAQs

Need more info on statutes of limitations? Read our 50-state guide.

Why do debt collectors block their phone numbers?

How long do debt collectors take to respond to debt validation letters?

What are the biggest debt collector companies in the US?

Is Zombie Debt Still a Problem in 2019?

SoloSuit FAQ

If a car is repossessed, do I still owe the debt?

Is Portfolio Recovery Associates Legit?

Is There a Judgment Against Me Without my Knowledge?

Should I File Bankruptcy Before or After a Judgment?

What is a default judgment?— What do I do?

Summoned to Court for Medical Bills — What Do I Do?

What Happens If Someone Sues You and You Have No Money?

What Happens If You Never Answer Debt Collectors?

What Happens When a Debt Is Sold to a Collection Agency

What is a Stipulated Judgment?

What is the Deadline for a Defendants Answer to Avoid a Default Judgment?

Can a Judgement Creditor Take my Car?

Can I Settle a Debt After Being Served?

Can I Stop Wage Garnishment?

Can You Appeal a Default Judgement?

Do I Need a Debt Collection Defense Attorney?

Do I Need a Payday Loans Lawyer?

Do student loans go away after 7 years? — Student Loan Debt Guide

Am I Responsible for My Spouses Medical Debt?

Should I Marry Someone With Debt?

Can a Debt Collector Leave a Voicemail?

How Does Debt Assignment Work?

What Happens If a Defendant Does Not Pay a Judgment?

How Does Debt Assignment Work?

Can You Serve Someone with a Collections Lawsuit at Their Work?

What Is a Warrant in Debt?

How Many Times Can a Judgment be Renewed in Oklahoma?

Can an Eviction Be Reversed?

Does Debt Consolidation Have Risks?

What Happens If You Avoid Getting Served Court Papers?

Does Student Debt Die With You?

Can Debt Collectors Call You at Work in Texas?

How Much Do You Have to Be in Debt to File for Chapter 7?

What Is the Statute of Limitations on Debt in Washington?

How Long Does a Judgment Last?

Can Private Disability Payments Be Garnished?

Can Debt Collectors Call From Local Numbers?

Does the Fair Credit Reporting Act Work in Florida?

The Truth: Should You Never Pay a Debt Collection Agency?

Should You Communicate with a Debt Collector in Writing or by Telephone?

Do I Need a Debt Negotiator?

What Happens After a Motion for Default Is Filed?

Can a Process Server Leave a Summons Taped to My Door?

Learn More With These Additional Resources:

Need help managing your finances? Check out these resources.

How to Make a Debt Validation Letter - The Ultimate Guide

How to Make a Motion to Compel Arbitration Without an Attorney

How to Stop Wage Garnishment — Everything You Need to Know

How to File an FDCPA Complaint Against Your Debt Collector (Ultimate Guide)

Defending Yourself in Court Against a Debt Collector

Tips on you can to file an FDCPA lawsuit against a debt collection agency

Advice on how to answer a summons for debt collection.

Effective strategies for how to get back on track after a debt lawsuit

New Hampshire Statute of Limitations on Debt

Sample Cease and Desist Letter Against Debt Collectors

The Ultimate Guide to Responding to a Debt Collection Lawsuit in Utah

West Virginia Statute of Limitations on Debt

What debt collectors cannot do — FDCPA explained

Defending Yourself in Court Against Debt Collector

How to Liquidate Debt

Arkansas Statute of Limitations on Debt

Youre Drowning in Debt — Heres How to Swim

Help! Im Being Sued by My Debt Collector

How to Make a Motion to Vacate Judgment

How to Answer Summons for Debt Collection in Vermont

North Dakota Statute of Limitations on Debt

ClearPoint Debt Management Review

Indiana Statute of Limitations on Debt

Oregon Eviction Laws - What They Say

CuraDebt Debt Settlement Review

How to Write a Re-Aging Debt Letter

How to Appear in Court by Phone

How to Use the Doctrine of Unclean Hands

Debt Consolidation in Eugene, Oregon

Summoned to Court for Medical Bills? What to Do Next

How to Make a Debt Settlement Agreement

Received a 3-Day Eviction Notice? Heres What to Do

How to Answer a Lawsuit for Debt Collection

Tips for Leaving the Country With Unpaid Credit Card Debt

Kansas Statute of Limitations on Debt Collection

How to File in Small Claims Court in Iowa

How to File a Civil Answer in Kings County Supreme Court

Roseland Associates Debt Consolidation Review

How to Stop a Garnishment

Debt Eraser Review

Do Debt Collectors Ever Give Up?

Can They Garnish Your Wages for Credit Card Debt?

How Often Do Credit Card Companies Sue for Non-Payment?

How Long Does a Judgement Last?

​​How Long Before a Creditor Can Garnish Wages?

How to Beat a Bill Collector in Court

Not sued yet?

Use our Debt Validation Letter.

Out Debt Validation Letter is the best way to respond to a collection letter. Many debt collectors will simply give up after receiving it.

Let's Do It

It only takes 15 minutes.

And 50% of our customers' cases have been dismissed in the past.

"Finding yourself on the wrong side of the law unexpectedly is kinda scary. I started researching on YouTube and found SoloSuit's channel. The videos were so helpful, easy to understand and encouraging. When I reached out to SoloSuit they were on it. Very professional, impeccably prompt. Thanks for the service!" - Heather

Get Started