Better Business Bureau of Southern Arizona is joining with over 60 federal, state, and local government agencies, and national organizations to promote consumer education during the 15th annual National Consumer Protection Week (NCPW), March 3-9.

“We’re very excited to be a part of National Consumer Protection Week,” said Kim States, BBB President. “This week is all about teaching consumers the tools to make smarter purchasing decisions, and that’s exactly what we plan to do.”

Each weekday during NCPW, BBB will issue a consumer protection tip via its Facebook page- www.facebook.com/soazbbb- on a variety of consumer related issues, such as credit and debit cards, buying a car, giving wisely to charity and other important marketplace issues. Consumers are more than welcome to offer their input or pose any questions they might have about each tip on BBB’s Facebook page.

One of BBB’s many partners in NCPW, the Federal Trade Commission (FTC), recently issued its Consumer Sentinel Network Report for 2012. The FTC uses data from 27 federal and state law enforcement agencies, and a host of private entities- including BBB- to create the report. Some of the 2012 report’s findings included:

• Arizona ranks eighth in the U.S. in fraud complaints, and eighth in identity theft complaints.
• The Sierra Vista-Douglas metro area ranks 12^th in the country for consumer fraud complaints.
• Arizona consumers filed 33,434 fraud complaints and 7,032 identity theft complaints last year with BBB, the FTC, and other law enforcement agencies.
• The top three national complaint categories in 2012 were: identity theft, debt collection, and complaints about banks and lenders.
• Nationally, consumers reported losing more than $1.4 billion to fraud in 2012.

To read the entire 2012 Consumer Sentinel Network Report visit www.ftc.gov. For more information about National Consumer Protection Week visit www.ncpw.gov.

Better Business Bureau of Southern Arizona is warning financially troubled families to beware of misleading debt settlement companies that claim they can easily reduce or eliminate credit card debt.  Since the start of the recession, BBB’s nation-side have received more than 3,500 complaints from individuals, including many who paid hundreds of dollars in upfront fees to debt settlement companies but only fell deeper into debt.

Locally, BBB has received seven complaints from Southern Arizona consumers against debt settlement companies, and average monthly inquires into the companies have increased 200 percent since the start of the recession.

“The debt settlement industry is flourishing and many families are being lured into believing that debt settlement is an easy fix,” said Kim States, BBB President. “The truth is that the process doesn’t work for many consumers, it has potentially serious negative consequences, and should primarily be used as a last ditch effort to stave off bankruptcy.”

Consumers from all 50 states have filed complaints with BBB about debt settlement companies since the recession began in late 2007. In addition to BBB, angry customers are also taking their complaints to their state Attorney General. Attorneys General from Florida, Maine, Texas, Idaho, Missouri, New York, Illinois, West Virginia, Vermont and Minnesota have taken action against companies such as Dallas-based Debt Settlement America, Debt Rx USA, Financial Freedom of America and Credit Solutions—which has received more than 1,600 complaints alone in the last 36 months—and Austin-based Clear Your Debt and Swift Rock Financial Solutions.

Some practices by debt settlement companies are also coming under fire on Capitol Hill. On April 28, Senator Charles Schumer (D-NY) introduced The Debt Settlement Consumer Protection Act, which seeks to “protect consumers from deceptive, abusive and financially injurious practices rampant in the debt settlement industry.”

Typically with debt settlement (also referred to as debt negotiation), the consumer pays an upfront fee to the debt settlement firm with the understanding that the company will try to negotiate a settlement with creditors for less than what is owed. The debt settlement business works with the consumer to establish a plan for the consumer to put money into an account administered by the debt settlement company or a third party, and that money is used to pay any negotiated settlements. It will usually take at least six months to a year before there is enough money to start settling accounts, and during that time the consumer will typically not be making payments to creditors. Not only does this put the consumer at risk of having creditors file garnishments or other legal actions, his or her credit rating will likely suffer as a result of not making required monthly payments.

Complainants to BBB allege that instead of having their debt settled as promised, they were driven deeper into debt and sometimes sued by their creditors—which led to mounting legal fees—and had (more…)