Regular readers of this blog know that I often write about bogus “debt elimination programs.” I’m mainly referring here to those “legally walk away from your credit card debt” scams, where the perpetrators claim they have discovered a magic loophole that allows you to erase your debts. Supposedly, it’s all based on the theory that the banks “monetize” your signature when you apply for a credit card, so you’re really borrowing your own “money” when you use that little plastic credit card. I’ve written extensively on why this scheme does not work – so I won’t repeat that discussion here. See my earlier blog posts on this subject. What I want to focus on today is how to convince a potential victim of this scam that they are about to be ripped off.
As an industry expert who counsels debt-strapped consumers on a daily basis, one of the most frustrating situations for me is when I’m speaking with someone who believes in this “debt elimination” system. It’s almost as though they have joined a cult. Really, the depth of belief in the “evils of our monetary system” can be that strong. I have tried to use simple logic to dissuade people from using these programs, with mixed results. The problem is that many consumers desperately WANT to believe the smoke-and-mirrors nonsense is really true.
So I’ve finally hit upon a way of getting my point across. I’ll share it with you in this post, in the hopes that if you have a family member, friend, or loved one who is about to fall for this scam, maybe you can get them to see the light using this approach.
The key is to focus on how the fees get paid. These debt scams cost plenty. The con artists used to be content with “only” $2,500 in fees, but nowadays they often charge $5,000 or more, and I’ve talked with people who have lost more than $10,000 in this scam. So where does the money come from to pay those enormous fees when people are already struggling to pay their bills? Surprise, surprise. The sales agent gets the victim to TAKE A CASH ADVANCE on any open credit card account that still has unused credit! If the victim-to-be is maxed out on their credit cards, but still has a decent credit score, they encourage the person to OPEN A NEW CREDIT CARD ACCOUNT just to get the cash to pay off their huge fee. They tell the consumer they can do this without intending to pay the money back. Folks, this is FRAUD, pure and simple. There is no other word for such a sleazy technique.
So as I was politely debating this subject with someone who kept trying to convince me of the validity of this debt elimination approach, I asked a simple question that changed everything. It went something like this: “OK, let me see if I have this right. The person trying to sign you up says that credit card banks are operating illegally, and that there is no real money changing hands when you borrow against a credit card. So why do they want you to use this flawed and illegal credit card system to pay their fee? If that isn’t REAL MONEY, why do THEY want some of that funny money from YOU?”
Major light bulb effect. The person immediately understood that they were being conned. And that’s the gist of it, really. Most of the scam promoters crow about how they are “revealing the truth” to the American consumer, offering “freedom from debt slavery,” and so forth. It’s all bunk. If their true mission was really to help the consumer, why the giant fees? If money borrowed against a credit card isn’t real money, why do they want some of it? This shows the utter hypocrisy of these people. They whine about what a flawed financial system we have, and how the banks operate illegally, but they want the victims to pay their fees using that same “non-existent” money. If the promoters were true to their fine words, they would offer their services on a barter basis, or ask for payment in gold coins (i.e., “real” money). But no, they are quite happy with electronic currency. That’s because it IS real money, and they can pay their own bills with it just fine!
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