Credit repair scams are on the rise, with 401 scams reported in 2020 and 515 reported in 2021, according to the Better Business Bureau. There have been whopping 252 reported credit repair scams so far this year, according to bureau data. This year seems to be track to see major increases in such scams.
Officials with the Federal Trade Commission said they’re also doing more to prosecute people behind the scams. The agency in May sued to shut down two credit repair operations in Michigan and Florida that bilked millions of dollars from customers.
Credit repair scammers prey upon consumers who are already financially struggling and they do so by promising to remove even accurate information on someone’s credit report, the FTC said.
Consumers typically reach out to a credit repair company because they’re gearing up to buy a car, rent an apartment or buy a house, said James Perry, a fraud counselor for the National Consumers League, a consumer advocacy nonprofit in Washington, D.C. Consumers want their credit score increased fast and people behind credit repair scams play on that sense of urgency, Perry told Finurah.
“They know what you want to hear,” Perry said. “And the next thing you know, you’re giving control to a total stranger and handing over money to a total stranger.”
One scam victims story
About a year ago, Charletia Jaskiewicz of Valdosta, Georgia, found herself in the middle of a lawsuit against Synchrony Bank over $4,790.
Jaskiewicz told a close friend about the lawsuit and the friend suggested she hire Michael Gibson to represent her in court. Gibson was the owner of a local credit repair company but he could also help settle the lawsuit, the friend told Jaskiewicz.
Following the friend’s advice, Jaskiewicz said she contacted Gibson and he promised to represent her and repair other issues on her credit report. Jaskiewicz said something told her not to hire Gibson, but she did so anyway because a friend recommended him.
“It sounded way too good to be true, and I should have just went with my gut,” Jaskiewicz said.
Jaskiewicz said she and at least three other women in Georgia hired Gibson to repair their credit, paid the fees that were asked but didn’t see their scores improve. Gibson’s Blue Collard Credit Counseling asks clients for sensitive personal and financial information then disappears, Jaskiewicz told Finurah.
Blue Collard Credit Counseling didn’t respond to a request for comment on scam allegations. Jaskiewicz said she filed a police report on Gibson and the man has blocked her from contacting him. Jaskiewicz said she’s now worried about what Gibson can do since he has her personal data.
“I sent him my Social Security numbers and driver’s license number and everything else he would need to steal my identity,” she said.
Jaskiewicz’ story is one of hundreds of other scenarios nationwide where consumers have reported being scammed from a credit repair company.
Red flags to look out for
Perry and the FTC said there are a few red flags consumers should look for if they suspect a scam credit repair operation. They include:
- If a company tells you not to contact credit bureaus directly
- If a company asks you to lie on a credit or loan application
- If a company promises to negotiate a debt amount down on your behalf
- If a company tells you to dispute information that you know is accurate on your credit report
- If a company doesn’t fully explain your rights when seeking their help on repairing your credit
Consumers need to know, more than anything, that they can perform the same tasks on their own as a credit repair company claims to offer, Perry said. But if you must turn to a credit repair company, choose one that won’t make you pay up front, he said.
Jaskiewicz said she paid Blue Collard Credit $1,359 for services that never came. She ultimately decided to pay off the Synchrony balance in full without Gibson’s help. She said Gibson never refunded her the $1,359.
Jaskiewicz said she owes about $315 on the balance and can’t wait to pay that off. Jaskiewicz’ advice to someone else looking to repair their credit: don’t follow the path she took.
“Do not pay until you’ve seen results yourself,” she said. “And you should always follow your gut.”