Want to live debt free? 4 signs you might be getting ripped off

Photo: Shutterstock
Photo: Shutterstock
If you’re a regular reader of my consumer advocacy columns, you probably already know that the word “free” should trip all kinds of alarms.

If not, don’t worry, I’ll get you up to speed: If you see the word “free” in a product offer, run!

But “free” can be used in another equally important context. Promises to make you “debt free,” for example, can leave you even deeper in the hole. There, too, my advice is identical — don’t walk, flee.

Debt-free, or “last dollar” scams, are, after identity theft, among the most complained-about swindles in America, according to the Federal Trade Commission (FTC). These scams are part of a broad group of cons that can involve selling you promises of a job, a government grant or some other money-making opportunity.

They target the most desperate consumers — people who want to modify their mortgages or save them from foreclosure.

I deal with scammers every day, and even wrote a book called “Scammed.” But nothing’s quite as evil as taking the last dollar from a consumer. The villains who perpetrate these swindles deserve to be thrown in the darkest dungeon for the rest of their lives. They give false hope to the most desperate among us.

Fortunately, both the FTC and the Consumer Financial Protection Bureau (CFPB) feel the same way. In numerous enforcement actions last year, both agencies cracked down hard on “debt-free” scams. A closer look at their actions suggests there are obvious warning signs that can keep you from falling for these fraudulent offers.

1. The word free.

Repeat after me: There’s no such thing. Here’s one “free” government grant scam that cost consumers at least $1.7 million. Say no more.

2. Ridiculous claims.

Here’s one company nabbed by the CFPB that claimed its customers would be debt-free “in months.” Instead, it allegedly hit them with fees for services it didn’t perform. A smart customer would have known it was too good to be true.

3. A ringing phone.

The scam artists routinely run afoul of telemarketing laws, like this one, which also comes to us courtesy of the CFPB. In other words, they hire armies of salespeople who call your phone after hours and try to talk you into buying their scammy services. The best remedy: Add yourself to the National Do Not Call Registry and don’t answer the phone unless you recognize the number.

4. Pay to play.

If, in order to get out of debt, you have to get into more debt, then you’re dealing with a questionable operation. Case in point: this company, which was targeted by federal and state authorities for charging illegal up-front fees. If it seems to you that the money is flowing in the wrong direction, then you’re in good company. Looks like the government watchdogs agree with you. Don’t fall for it.

Truth is, the path of the scammed is littered with warning signs beyond these four “gotchas.” Are they obvious? In hindsight, yes. Can the average consumer see them with a little practice? Absolutely.

There are no shortcuts to zero debt. If you’re in over your head, contact your state attorney general or a reputable credit counseling service for help. Neither of these entities will call your phone at dinnertime with an offer that’s hard to refuse. Neither will offer an easy way out. But they will help you.

What's the biggest warning sign you're about to fall for a debt scam?

View Results

Loading ... Loading ...

Christopher Elliott

Christopher Elliott is an author, journalist and consumer advocate. You can read more about him on his personal website or contact him at chris@elliott.org. Got a question or comment? You can post it on the new forum.

More Posts - Website - Twitter - Facebook - LinkedIn - Google Plus

  • http://lazytravelers.net/ Andy Shuman

    Getting out of debt is quite easy, actually. But people don’t like easy. They like miracles. And this National Do Not Call Registry gotta be the most toothless registry in the world. Scamsters don’t care and reporting them doesn’t change a damn thing.

  • http://elliott.org Christopher Elliott

    I agree, the Do Not Call Registry is not always an effective deterrent. It didn’t work for my parents, who are constantly being bombarded with solicitations.

  • Justin

    A fool and his money are soon parted….Short of a bankruptcy attorney or credit counseling service from the government, debt doesn’t resolve itself. There’s no quick fixes. It took time to get into debt and it takes time to leave debt behind.

  • Justin

    @Christoper Elliott

    Scam artists often target the elderly. Not hard to look up people online and find their age either. Scammers know older folks are easily swindled and less likely to pursue legal taction.

  • John Baker

    Debt is like weight … Adding it is really fun and there’s no easy way to lose it once you have it beyond self discipline. I wish there was magic pill to drop 15 lbs or a magic program to get out of debt without effecting your income or expenses. Neither exists (except for extreme measures like surgery or bankruptcy)

  • Raven_Altosk

    DNC List doesn’t block against the scam artists. I used to get calls from “Kimberly at Debt Relief Services” from a variety of numbers. Having nothing better to do one day, I harassed her back over the phone.

    One time, I pretended to be in the witness protection program and screamed at her for finding me.
    Another time, I pretended to be a serial killer and told her I knew where her kids went to school, her ex had hired me to kill her and the phone call made it just that much easeir….oh, and that I loved eating liver with fava beans and a nice Chianti…

    They stopped calling.

  • Kairho

    That’s just mean. (love it!)

    I once detained a basement waterproofing “salesman” on the phone for about 20 minutes, leading him into thinking he had a sale. He finally went for the order and I said there was just one problem: I don’t have a basement. He hung up. Never bothered again, by them at least.

  • j_moody_jr

    Absolutely! Flee before you are fleeced. With multiple media types for reaching a vulnerable target audience, the problem and impact is much more substantial in today’s information age.


    It doesn’t work well for us either. We get calls from “card member services” several times a week wanting to help us with our cc debt, even though we don’t have any.

  • emanon256

    This vote is tough for me. I can’t decide between pay-to-play and to-good-to-be-true.

    I want to buttress Chris’s statement on talking to reputable credit counseling services. This services are amazing and cost consumers nothing. The sad thing is, the scammers often try to pose as them, and its hard to tell them apart.

    I’ve mentioned several times that I used to teach personal finance classes, and I can attest that these actual non-profit credit counseling services really do help people. They do try to get settlements when they can, and they try to create structured payments as well. Many of them work with the debtor to come up with a budget which includes how much they can pay per month towards their debts, then work with the creditors to get the to accept payment terms based on what the debtor can pay, and then handle all of the payments. They do not take any of this money for themselves. They get grants, federal and state funding, and ask the creditors for donations to help run their programs. This services are amazing and save many people from debt and/or bankruptcy. They never promise to make someone debt free in X number of days, or to erase debt, they promise to teach you how to manage and eventually pay off your debt.

  • emanon256

    Yeah, whats up with that? Ive gotten those calls to and I don’t carry any CC debt.

  • VoR61

    Chris, if they have a smart phone, they can install an app like Mr. Number (“free”), which would allow them to “hang up” on calls “not in their contacts”. It also has options to block private numbers, numbers beginning with, etc.

    We use this and it’s great. Of course for them it sounds as though they would need unlimited talk/text plans because the hang up counts as 1 minute.

  • Cybrsk8r

    There is, however, a very simple way to screen out the vast majority of tele-marketers and scammers, even if you don’t have an answering machine. Always let your phone ring at least 6-7 times before answering.

    Why? Because tele-marketers have research that says that if you don’t answer by the 5th ring, the chances are you’re not going to, and they’ll go on to the next name/number on the list. They’re not going to waste time letting your phone ring and ring and ring.

    But a freind or family member who wants to talk to YOU, will let the phone ring longer than that before giving up.

    I read this somewhere many years ago, and trust me, it works.

  • TonyA_says

    Had a friend (he’s dead now) who looked at CID (caller info) first and if he did not recognize it he’d answer “House of Sex, how can I help you?”.
    He got rid of many nuisance calls.

  • emanon256

    Sorry about your friend, but good idea. Though I am too afraid I woudl end up embarrassing myself.

    Many years back I added a second land line for business, (I no longer have any land line), and kept getting calls for the people who had the numebr before me. I would tell people that they are no longer at this number, and one person just kept calling. Finally after several months of telling them that their friend got a new number, I told them their friend had died. The calls stopped after that. I feel sort of mean though.

  • Justin

    Classes to teach common sense… Novel…. You make X / month. Say 1000 after taxes. Your rent is 500. Electricity, Food, Medical, Fuel are 350. A net of 150 is left. Smart to put 10%-25% aside for emergencies. So 100 goes into bank account.

    You’re left with $50 dollar towards “Debt”.

    Simple addition and subtraction….

  • emanon256

    It sounds very simple to you and me, but you would be surprised how hard this is for some people. People who get credit cards, put everything on them without though, and are only concerned about the minimum payment fitting into their budget, even after going through the class.

    I also can’t tell you how many people, after working on their budget, realized they were spending $100-$250 a month on cigarettes, and would not even consider cutting back or quitting. Options were quit smoking and pay of all debt in 18 months, or keep smoking and going further into debt.

  • Jeanne_in_NE

    What I did for my mother (before she had to give up her home phone) was to sign up for the bundle with the “No Solicitation” feature. All callers get this message, “You have reached a number which does not accept solicitations. . .”. Callers have to press 1 to have the phone call ring through, OR the customer needs to have programmed in the numbers that they will accept. Mom had a lot of elderly friends who called her number who weren’t on the programmed list and once they got through to her, asked her how THEY could get that put on their phones!

    It was so worth it to pay the extra $2.95 +taxes and taxes and taxes to not have the solicitors get through, because she saved that money and more every month by not succumbing to some aggressive telemarketer asking her to contribute “even $10” to help save the ________________.

    Now, we have an answering machine for her, programmed with a long number of rings, before my husband’s voice answers in a spot-on foreign accent (fooled my nephew!). That isn’t nearly as effective, but it’s entertaining.

  • Justin

    You must have met two friends of mine….

    People listen when and if they’re ready. No class in the world can fix stubborn.

  • Jbrjbr3797Joe Reynolds

    Yes, that credit card thing keeps coming. I even called the FBI and thy said that a crime had not been committed. Do I have to commit a crime to get them to have the people stop calling me? I’m registered and re-registered for the “DO NOT CALL” . I have asked these people to put me on their do not call list. These disrespectful people deserve to run into a psych.

  • MarkKelling

    An answering machine fixes the solicitor calls – they won’t leave a number! After a while they just quit calling.

    It seems that when you answer the phone and it is a solicitation, the company shares your number with every company out there letting them know you answer. Just stop answering (by letting your answering machine do it) and the calls drop off. People who really want to talk to you that you want to talk to will still get through.

  • Justin

    Add a blocked number restriction, forcing callers to unblock before calls are received. Telemarketers don’t want their numbers showing up.

  • Extramail

    We are on the do not call list. We get at least two fraudulent calls a day. We have caller i.d. and don’t answer those calls. My phone is so full with blocked numbers that I can’t add anymore. The do not call list is a joke! And, now we are beginning to get the scam calls on our cell phones. Makes me furious!

  • Jeanne_in_NE

    My mother’s facility’s phone system doesn’t support all the fancy items I take for granted in my own bundle from the phone company. But it’s a great tip for others, thank you!

  • jennj99738

    For your mother’s situation, is she able to connect her own phone? If so, you might want to look into Panasonic cordless phones that offer a call blocking feature. When a number continues to call, you can block that particular number. It doesn’t require the phone company. It blocks it at the device itself. It still gives a half-ring when the harasser calls but then nothing. Eventually, the solicitor gets the idea. Doesn’t work in all situations but better than nothing. I use it all the time.

  • Carver Clark Farrow

    That’s priceless.

  • Kairho

    This (blocking everything not in contacts) can be shortsighted, esp for business. First, many people call back from other phones, not their usual. Or they call back through a trunk bank and get some seemingly random number.

    Second, quite often one would get a requested or legitimate one-time call or callback and the number would definitely not be in contacts. These could be business or even personal (and sometimes critical). (Great example would be your daughter calling from jail!)

    I had a third reason but cannot remember it now!

    Fourth reason was some calls that you do want to receive sometimes come in with blocked caller ID. Some banks, for instance. (Why? I don’t know.)

  • VoR61

    My list was not intended to be all inclusive. Mr. Number allows sending to voice mail, and also includes exceptions. And, of course, you can enter whole phone numbers manually.

    The point is, it can be used successfully to “block” calls in 99% of the cases while allowing desired calls to come through.

  • Joe_D_Messina

    They don’t leave messages but my experience is they will continue to call you forever… especially the scams since they don’t really care who they’re calling..

    And junk mail is just as bad. My mother has been deceased for many years yet we still get mail for her.

  • Carver Clark Farrow

    I handle bankruptcy for some of my clients. It’s often not that easy to get out of debt depending on one’s circumstances. Especially when those debts result from business or investment losses

  • http://lazytravelers.net/ Andy Shuman

    Carver, of course I didn’t mean bankruptcy resulting out of business issues, those can be complicated as hell. My remark mostly refers to personal issues such as credit card debt.