credit repair scam warning sign #5
Creating a professional looking website where people can purchase your services online is remarkably cheap and easy. Pay $10 or less for a domain name, as little as $5 a month for website hosting, upload your template driven website, integrate a Paypal credit card submission form, and you are on your way. Someone with a little experience could have a brand new website up and ready to go in a matter of hours and if you aren't paying attention, you're none the wiser.
There are a couple of reasons why you should be wary of a credit repair company that uses a third party credit card processing system instead of having one of their own. First, as was detailed when talking about paying for credit repair services using cash, there more hoops the company must jump through to be able to process credit cards and there are more protections in place to help you recover your money from a fraudulent company. While there are still some protections in place when purchasing something through a third party platform, they aren't as robust and the credit repair company doesn't have near the same level of accountability. Anyone who has sought a Paypal refund after purchasing what was billed as a new Blackberry on ebay and received a worthless Blueberry knows that sometimes you're just out of luck.
The second reason goes back to the second sign of a credit repair scam. According to the Credit Repair Organizations Act, a credit repair company is not allowed to accept payment for services until those services have been performed. With a legitimate credit repair company, even though they collect your payment information at the time you sign up for services, they do not charge your credit card until after the agreed upon services have been performed according to the contract you signed. If, however, a company uses a third party credit card processing system, they do not have this option. As soon as you submit your billing information, expect the payment to be deducted from your card. Unless the company instructs you to return to their site and submit payments as work gets completed, the company will be charging you for services before they are rendered which in most cases is against the law.
1) Offer to Create a New Credit Report
2) Require Large Upfront Payments
3) Don't Have a Contract
4) Only Accept Cash, Checks, or Money Orders
5) Use a Third Party Payment System
Use a Third Party Payment System
How do you know if a company uses a third party credit card processing system?
Usually it is pretty easy to tell. When using Paypal to process payments, the company will typically request that you click a button that takes you to the Paypal site to complete your order.
Other times it will be less obvious but you'll still be able to tell by watching the address bar of your browser. When you are asked for your payment information, the web page address will change from the company's URL (ie creditrepairinc.com) to the URL of a third party credit card processor like 2checkout.com or multicards.com.
So you found a credit repair company that accepts credit cards, all must be well. Nobody would let an illegitimate credit repair company charge people's credit cards so you must be dealing with a company you can trust, right? Not necessarily. It also matters how those credit cards are being processed.
Usually it is pretty easy to tell. When using Paypal to process payments, the company will typically request that you click a button that takes you to the Paypal site to complete your order.
Other times it will be less obvious but you'll still be able to tell by watching the address bar of your browser. When you are asked for your payment information, the web page address will change from the company's URL (ie creditrepairinc.com) to the URL of a third party credit card processor like 2checkout.com or multicards.com.
Creating a professional looking website where people can purchase your services online is remarkably cheap and easy. Pay $10 or less for a domain name, as little as $5 a month for website hosting, upload your template driven website, integrate a Paypal credit card submission form, and you are on your way. Someone with a little experience could have a brand new website up and ready to go in a matter of hours and if you aren't paying attention, you're none the wiser.
There are a couple of reasons why you should be wary of a credit repair company that uses a third party credit card processing system instead of having one of their own. First, as was detailed when talking about paying for credit repair services using cash, there more hoops the company must jump through to be able to process credit cards and there are more protections in place to help you recover your money from a fraudulent company. While there are still some protections in place when purchasing something through a third party platform, they aren't as robust and the credit repair company doesn't have near the same level of accountability. Anyone who has sought a Paypal refund after purchasing what was billed as a new Blackberry on ebay and received a worthless Blueberry knows that sometimes you're just out of luck.
The second reason goes back to the second sign of a credit repair scam. According to the Credit Repair Organizations Act, a credit repair company is not allowed to accept payment for services until those services have been performed. With a legitimate credit repair company, even though they collect your payment information at the time you sign up for services, they do not charge your credit card until after the agreed upon services have been performed according to the contract you signed. If, however, a company uses a third party credit card processing system, they do not have this option. As soon as you submit your billing information, expect the payment to be deducted from your card. Unless the company instructs you to return to their site and submit payments as work gets completed, the company will be charging you for services before they are rendered which in most cases is against the law.
Warning Signs of a Credit Repair Scam
1) Offer to Create a New Credit Report
2) Require Large Upfront Payments
3) Don't Have a Contract
4) Only Accept Cash, Checks, or Money Orders
5) Use a Third Party Payment System
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We've all heard the story: I paid my bills, had great credit and then got a divorce, spent 100,000 in legal fees and could not pay my bills... It was a choice between keeping my kids with me or paying my debts - you choose the kids. Meanwhile creditor's... moreNathalie
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