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In today’s environment of high debt levels and declining wages, it is no wonder that so many individuals have marginal or poor credit scores and are looking for a way to repair them.  There are many scam artists out there willing to prey on those desperately seeking a solution and it seems that another new scam to obtain money from these solution seekers appears every week.  Would you be able to identify a credit repair scam if it was presented to you by a seasoned scammer?  Here is how you can identify some of the most common credit repair scams used today so that you do not become a victim of these thieves.

The File Segregation Scam

This seems to be one of the more prevalent credit repair scams out there, with thousands of individuals becoming victims of the scam each year.  The way that the scam works is that the scammer obtains an employee identification number from the IRS to be used in place of the individual’s social security number, thereby divorcing all new credit information obtained through the employee identification number from previous credit information linked to the person’s social security number.  Some people go a step further and use new addresses and phone numbers with the employee identification number to make it even harder to associate the two accounts.

Although this may seem like a great way to wipe the slate clean and start over, it could end up costing you a great deal of money and a criminal conviction.  In essence, the scam artist is teaching the consumer how to create a false identity, the use of which is a felony anywhere in the nation.  The price that is paid for using this method is way more than you will actually pay the scam artist to create this fraudulent identity.

The Negative Information Removal Scam

Some scam artists will tell potential victims that they can remove negative information from a credit report, for a nominal fee of course.  The problem is that accurate negative information on a credit report cannot be removed and may be visible on your credit report for seven years or more.  The most that any legitimate credit repair company can do is obtain a copy of your credit report, review it for errors, and notify the credit reporting bureau of any discrepancies that they find.  This you can do on your own for a much lower cost.

Identity theft is a terrible offense that continues to victimize the individual long after the theft has occurred.  The trouble begins when the theft is uncovered and continues as the individual attempts to correct the problems that are causing issues with their credit history.  If the individual is quick enough, they will be able to disclose the identity theft prior to the criminal attempting to use their information for fraudulent reasons.  The people that do not report identity theft fast enough may be denied a credit card or take significant hits to their credit history before they discover that identity theft has occurred.

Discovering Identity Theft

Generally, it is difficult to discover that identity theft has occurred because criminals are exceptional at covering their tracks.  The individual doesn’t know that their information has been compromised until the criminal has successfully obtained credit using their information or has used their personal information in other illegal manners.  The credit cards obtained using their personal information are typically sent to other homes, businesses, PO Boxes so the victim will never receive a statement for the credit card account or a default notice when the credit card balance is not paid.  If the telephone number entered on the application is fraudulent as well, the person won’t receive collection calls from the creditor and the creditor will have no way of getting in touch with the person whose information was used for the account.  It is very difficult to identify identity theft under these conditions.

Convincing The Creditor

If it is necessary to report identity theft, the person who has been victimized may have issues with persuading the creditor that they did not apply for the credit account and that they are not the person who has been using the account since its approval.  When identity theft is reported quickly, the individual can reduce the number of problems that they encounter by calling the creditor to cancel the account before the account is maxed out and it is easier to convince the customer service representative that their personal information has been compromised if the credit account has only been opened for a short period of time. 

Time Limitations

If identity theft is not reported quickly, a number of problems may occur.  Many creditors only acknowledge disputed charges made within a specific time period after the transaction has occurred.  If identity theft is not reported within that time period, the victim may be held responsible for the transactions made with that credit account.  Some creditors require verification that the person reporting the identity theft is not the individual who opened the accounts, which can be difficult to prove unless the thief has used entirely fraudulent addresses and telephone numbers for the account application.  If the debt has been sold to a collection agency before the identity theft is reported, the victim receive collection calls about the account for many years after the identity theft has occurred.

Experts estimate that nearly 20% of consumers have been the victim of cybercrime within the past two years at an estimated cost of $8 billion.  This cost includes financial losses related to identity theft, misuse of financial information, and the replacement of computers infected by malware.  It is much easier to protect yourself from becoming a victim of these scams when you can easily identify which communications may be fraudulent.

Delivery Notifications
A favorite of many scammers is the delivery notification scam.  With this scam, the scammer creates a fake email that looks like it is from a major delivery company or retailer and sends it to numerous consumers asking for a confirmation of personal information.  Individuals that fall for these scams can find their personal or financial information compromised or find malware installed on their computer that is difficult or impossible to get rid of.

E-Card Deliveries
Another common method of infecting computer systems with malware that can compromise personal and financial data is attaching a virus to an e-card that is mass mailed to unsuspecting consumers.  In many cases, these e-cards are sent to all of the contacts in a hijacked email address’s contact list so the e-card appears to come from a person the victim knows.  If you receive an e-card from a casual contact or from a person that has never sent you an e-card before, you may want to err on the side of caution and ask the person if they personally sent the e-card before opening the attachment or clicking on the link.

Auction Site Scams
One scam that is quickly gaining in popularity is the auction site scam.  With this scam, the scammer sends out a fraudulent email that appears to be from a popular auction website either confirming a high dollar purchase from the person’s account or claiming that there is an issue with an item that the person was bidding on.  Clicking the link in these emails allows the malware to be downloaded onto the victim’s computer where it can transmit data back to the scammer’s computer. 

Employment Scams
Today’s bleak employment landscape has given rise to another opportunity for scammers to gain access to the information on your computer by using employment offers as a lure to entice individuals to click on malware links.  Any offers of employment from companies that you do not remember applying to or emails offering work at home positions should be viewed with suspicion, as these are the most common methods used to expose the victim to viruses and malware.  Scammers are endlessly inventive, so it is best be suspicious of any email that does not look right, has grammatical errors, or does not conform to a contact’s typical activities.

Many people across the nation either have experienced or know someone who has experienced a business behaving badly.  This encompasses a wide range of barely legal but completely unethical behaviors on the part of the business to trick consumers out of their hard earned money.  Even though a small percentage of businesses engage in these behaviors, they tend to affect entire industries as confidence in the fairness of business practices are eroded across the board.  Here are some of the most notorious abuses and how to recognize them.

The Old Bait And Switch
This is one of the most common practices of unethical businesses and one of the hardest to detect until it is too late.  With this practice, the company promises the consumer an amazing deal, such as a heavily discounted price or extra services, to draw in the customer. After a short period of time, the price is raised or the person is billed for the additional services automatically, typically without warning.  The consumer then has the choice of paying the much higher price or paying an extortionate early termination fee to cancel their agreement.

The Fine Print
This technique is typically used in television or print advertisements and is one of the most easily recognized abuses by businesses.  The advertisement promises a great deal on a product or a service, but in tiny print at the bottom of the advertisement, there are a few lines that state additional conditions for the deal, such as an extremely limited quantity, automatic enrollment in another service, or that the price will be raised after a short period of time.  People that accept the deal as advertised are often hit with an unpleasant surprise that was buried in the fine print of the advertisement within a very short period of time.

Automatic Debits
Today, many businesses require you to submit a credit card number or bank account number for the “convenience” of automatic monthly payments to the company.  The problems typically come when the consumer tries to cancel the service or the company adds a new service to the contract and starts billing the consumer for the service without their consent.  It is best to be wary of whom you are giving your credit card or banking information to and in many cases, you may want to choose a service that does not require automatic debits to your accounts.

Term Layering
Layering is a fairly new technique used by businesses to make sure that consumers remain confused about the terms and conditions that they are agreeing to when they are doing business with the company.  Term layering is basically placing parts of the terms and conditions of a service in many different places so that it is difficult for the consumer to have all of the terms and conditions in a single place at the same time.  Some places where these binding terms can be found include product pamphlets, store receipts, store websites, and order forms, with only a portion of the terms and conditions printed in each place.

Every holiday season, scammers come out of the woodwork by the hundreds, armed with schemes to separate the unwary from their hard earned money.  These scammers know that in the rush of the holiday season, people are hurried and may not protect their personal information as well as they should.  Here are some of the most common scams found during the holidays.

Charity Scams
Scammers know that many people full of holiday cheer are more likely to give to charitable organizations in the hopes of spreading that cheer to the less fortunate among us.  These scammers send letters and emails to large numbers of people asking for donations for the holiday season when in reality they are just interested in lining their pockets and stealing your credit card information.  Be wary of any charitable organization soliciting donations that you have not heard of or cannot find a reasonable amount of information about on the internet.

Contact Scams
With this scam, the scammers send an email or social networking notification that an old friend or distant relative is interested in reconnecting with you.  Once the link in the email or on the social networking account is clicked, the person’s computer can be infected with any of a number of malware applications, including keystroke loggers to steal your passwords and credit card information.  At this time of year, it is better to be safe than sorry and be very cautious about clicking on links from people that you do not know or do not remember.

Luxury Goods Scams
During the holiday season, many websites spring up offering great deals on luxury merchandise, specifically clothing, jewelry, perfumes, and handbags.  Scammers use these websites to steal credit card numbers, to accept payment for merchandise that will never be delivered, or to sell inferior knockoffs that are worth much less than the website is selling them for.  A good rule of thumb to follow is if a deal seems too good to be true, it is more than likely that the deal is a ruse for a fraudulent activity.

Festive Item Scams
Another scam that is making the rounds this holiday season is the festive item scam.  With this scam, the scammers set up websites offering holiday ringtones, festive screensavers, or downloadable holiday songs and lyrics.  When a consumer clicks on or attempts to purchase one of these festive items, their computer can be affected with malware and viruses that lock up the computer and steal the person’s information.

Because of the importance of credit availability on many people’s lives, having access to the credit reports created by the three major credit reporting bureaus has become an integral part of financial planning.  The information on a person’s credit report has the ability to affect many different parts of a person’s life, including their ability to secure housing, their employment status, and how much they will pay for different types of financial products. 

The information in these credit reports is so important that the federal government has mandated that each person will be able to receive one free credit report from each of the three major credit bureaus for free each year.  These reports can be obtained all at once or at different times of the year so that the person can monitor for any changes during the year.

A Free Credit Report Can End Up Costing A Lot

Although the free credit reports are mandated by the government, many people have found that the credit report that they have requested has ended up costing them money.  In many cases, this is due to them making a request for a free credit report on a website other than the website endorsed by the government and unwittingly signing up for credit monitoring or other services provided by the company that runs the website.

The confusion typically results from the similarities in the names of the websites offering free credit reports.  The government supported website, which is the only one that guarantees the free credit reports required by law with no strings attached, has AnnualCreditReport.com as its web address.  Websites selling credit monitoring or other services while using the offer of a free credit report as a lure to draw in customers often use web addresses such as FreeCreditReport.com, MyFreeReport.com, or CreditReport.com.

These other websites offering free credit reports will attempt to entice the person into enrolling in services that can cost between $9.99 and $39.99 per month.  These fees are charged directly to a credit card number provided by the requestor as part of the requirements before the credit report can be accessed.  These services are generally offered as a free trial for a specific time period, but these companies know and are counting on the fact that many consumers will forget about the end of the trial and be billed for a couple of months of the service before they get around to canceling the subscription to the service.

It is important to verify the web address of the website you are on before submitting any personal information to obtain your credit report.  If you are not on the government endorsed website, then there is a good chance that you will be required to sign up for a service and provide a credit card number for billing before you are allowed access to your credit report.  If you comply, that free credit report can cost you plenty of money.

A multitude of new commercials advertising companies that offer tax debt relief have been appearing on many television stations during all hours of the day.  These commercials claim that these companies will be able to dramatically reduce the amount of money that a person will have to pay to settle a state or federal tax debt, even if the debt is years old.  In many cases, the claims that are made in these commercials seem too to be true and people have good reasons to be wary of the promises made in these commercials.

Promises Of Access To Tax Professionals
Although there are thousands of professionals whose business is to advocate for lower tax bills on behalf of their clients, in many cases the “professionals” that are working for these companies have had brief training and very little experience in actually negotiating with the IRS for tax relief.  Instead of providing the legal and financial tools needed to lower the tax bill by any significant amount, these firms are attempting to secure an Offer In Compromise (OIC) which is a settlement agreement between a taxpayer and the IRS for accounts that the IRS agents believe may be uncollectible any other way.  The IRS issuing an OIC for a tax debt is a long shot for most taxpayers.

Promises Of Settling For Pennies On The Dollar
Many of the commercials for tax debt relief that appear on television show individuals that had thousands of dollars in tax debt but settled their accounts for little or nothing at all.  In reality, this is extremely unlikely.  If the IRS determines that you have the means to pay the amount of your tax debt, they will use every means at their disposal to collect the entire amount of the debt.  This can include liens against your property, wage garnishment, and other actions to collect the money before it ever enters your hands.  The IRS can afford to wait to collect the entire amount of the tax debt and will often choose that collecting the entire amount over a number of years will be more beneficial than settling for a lower amount today.

Claims Of Effectiveness
Many of these commercials claim that the tax professionals at these companies can succeed where others have failed and get you the results that you desire.  These companies charge upfront fees of hundred or thousands of dollars for the employees of the company to take a look at your tax debt situation and often charge more fees for the work that they are claiming to perform on your behalf.  In most cases, the only way that the IRS is going to reduce your tax debt is if there is no possibility of you being able to repay the full amount of your tax debt anytime in the future.  Hiring a tax professional from one of these companies for hundreds of dollars is not a good way to prove to the IRS that you do not have enough money to pay your tax debt.

Experts estimate that cases of identity theft can cost consumers hundreds of millions of dollars annually and the damage doesn’t stop with the loss of the person’s money.  People that have become victims of identity theft also must deal with trying to remove the fraudulent accounts and charges from their credit record and take steps to prevent the theft of their personal information in the future.  It can take years for a person to repair the damage from a single instance of identity theft, which is why it is so important for a person to know the correct way to report cases of identity theft.

The First Step
The first step in reporting cases of identity theft is to review your credit report for any unauthorized accounts that may have been opened in your name.  Although you may realize that you have exposed your personal information and made it easily available to identity thieves, you will never know the total extent of the damage that the thieves have caused without obtaining a copy of your credit report.  The credit report will list all of the accounts that have been opened in a person’s name, making it easy for the person to determine which companies they need to call to close fraudulent accounts.

There is a government-authorized website that will allow a person to obtain one credit report from each of the three main credit reporting bureaus for free each year.  That website is AnnualCreditReport.com and the free credit reports can be obtained by typing your information into the online form and verifying your information to the program.  Within a short period of time, you will be able to view your current credit report online or can have a hard copy of your credit report mailed directly to your home.

The Second Step
The second step in correctly reporting cases of identity theft is to report the identity theft to your local law enforcement agency so that there is a criminal record of the theft.  Although it may be difficult for law enforcement to find a criminal based on a single instance of identity theft, most identity thieves steal information from a number of different people, increasing the chances that they will be caught.  Having an open criminal case that contains all of the information about the identity theft and the accounts that were opened in your name will help in the prosecution of the criminal when the criminal is caught.   

The Third Step
The third step that should be taken with cases of identity theft is to alert the credit bureaus that your personal information has been compromised.  The credit bureaus can remove the fraudulent accounts from your credit report so that the fraudulent accounts do not hurt your credit score.  The credit bureaus can also help you monitor your accounts in the future to make sure that no other accounts are opened in your name by the identity thieves.  Following these three steps as soon as you believe your personal information has been compromised can help you regain your financial security more quickly and limit the amount of damage that can be caused by cases of identity theft.

As people across the nation find that they are deeply in debt, they begin to search for a simple and easy solution to their financial problems.  In many cases, this means that the person will contact credit counseling companies that promise to eliminate their debt and give them a clean slate to start fresh.  In recent years, some of these companies have become very good at taking advantage of people in difficult financial situations, causing many people to become more deeply mired in debt and owing more money than they did before contacting the credit counseling company.

There are some indicators that will tell you whether the credit counseling company can really help you or whether the company is basically a scam to steal the money that the person has left.  By keeping these things in mind, the risk of being taken advantage of by a bad credit counseling company will be greatly reduced.

Illegal Charges To The Account

Some of the companies that offer credit counseling services tell their customers that charges, interest payments, or fees that have been charged to their account are illegal or that there are flaws in the credit agreement that make the entire debt amount illegal for collection.  With all of the lawyers that companies that extend credit hire to work for their firms, the chance of this actually happening would be slim to none and even if there was a small mistake in the credit agreement, it would not invalidate the purchases that have been charged on the account. 

A credit counseling company may offer to contact the creditor on the person’s behalf and, after time has passed, the company will tell the person that the creditor is discharging the debt or a lawsuit against the creditor has been filed on their behalf.  People that rely on these statements often find that their debt has increased due to finance charges and late payment fees.  The person may even be sued by the creditor for the balance of the account.

New Credit Profile

Some credit counseling companies may offer to eliminate the total amount of debt by creating a new credit profile for the person so the person can start accumulating fresh with a new credit history.  This process is accomplished by creating a fake social security number and creating a new credit profile under the person’s name and linked to the new social security number.  This is illegal and, if you are caught using this social security number and credit profile, you could be prosecuted and could be facing felony charges of fraud and identity theft that could result in going to prison for years. 

Although there are many credit counseling companies that can help a person reduce the amount that they owe, choosing a bad credit counseling company can lead to increased debt, being sued for large amounts of money, or even facing criminal charges.  The best solution is to do some research on the company you are thinking about doing business with to make sure that they are reputable and being on the lookout for any of these credit counseling scams.

People across the country are finding that they have used their credit unwisely and owe creditors a great amount of money that is increasing every day because of the interest charged to the account.  As they search for a solution to their financial problems, many people contact credit counseling companies that promise to repair their credit and give them a clean slate to start fresh.  Over the last several years, companies that scam people have become experts at taking advantage of people in difficult financial situations, but there are some clues that will tell you whether the company can really help you or whether the company is out to steal the money that you have left. 

By keeping these warning signs in mind, you will reduce the risk of being taken advantage of by a dishonest credit counseling company.

Telling You That There Are Invalid Clauses In The Credit Agreement

Some credit counseling services say their customers have charges, interest payments, or fees on their credit account that cannot be collected legally by the credit card company.  They may also tell the customer that there are clauses in their credit agreement that are not legally valid and that can work in their favor to make the entire total of the credit account illegal for collection.  In nearly all of these cases, the information that the company is giving the customer is incorrect and the total amount of the account is collectible under the laws of every state.

The way that this scam works is that the company will charge the customer a fee, often hundreds of dollars, for contacting the credit card company on behalf of the customer and alerting them that the debt is uncollectible.  After some time has gone by, the company will tell the customer that the creditor is discharging the debt or that they have filed a lawsuit against the creditor, which will require the payment of another fee.  People that fall for this scam will find themselves owing their creditors a significantly larger amount due to finance charges and late payment fees.  They may also find themselves sued by the creditor for the entire balance of the account for nonpayment. 

Offering To Create A New Credit Profile

Some credit counseling companies are offering to create a new credit profile for the person, wiping the slate clean so people with not have anything negative on their credit history and can apply for credit without being turned down.  This is typically accomplished by creating a fake social security number for the person and creating a new credit profile under their name with the new social security number.  This is illegal and if you are caught using this social security number, you could be prosecuted and sent to jail charge with a criminal felony and fraud charges. 

Although there are some credit counseling companies that can help a person reduce the amount of debt they are facing, many of the promises that are made by some of these companies make can lead to being sued by creditors, having criminal charges brought against the person, and spiraling deeper into debt.  The best solution is to contact one of the many government agencies offering free financial planning and following the advice that they give you, allowing you to repair your credit in a safe and legal way.