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Debt Relief Service and Credit Repair Scams

Debt relief service scams target consumers with significant credit card debt by falsely promising to negotiate with their creditors to settle or otherwise reduce consumers' repayment obligations. These operations often charge cash-strapped consumers a large up-front fee, but then fail to help them settle or lower their debts – if they provide any service at all. Some debt relief scams even tout their services using automated "robocalls" to consumers on the Do-Not-Call List.

Auto loan modification scams falsely promise that they can reduce consumers' monthly car loan or lease payments to help them avoid repossession. The FTC also works to make sure consumers get a fair deal in the auto marketplace.

Credit repair scams also frequently target financially distressed consumers who are having credit problems. These operations lure consumers to purchase their services by falsely claiming that they will remove negative information from consumers' credit reports even if that information is accurate.

The FTC has brought scores of law enforcement actions against these bogus credit-related services, and the agency has partnered with the states to bring hundreds of additional lawsuits. Further, in 2010, the FTC amended its Telemarketing Sales Rule to protect consumers seeking debt relief services, like debt settlement or credit counseling. The Rule prohibits for-profit companies that sell these services over the telephone from charging a fee before they actually settle or reduce a consumer's debt. It also prohibits debt relief providers from making misrepresentations and requires that they disclose key information that consumers need in evaluating these services.