The Federal Trade Commission has yet another shady business category in its sights: mortgage modification and bankruptcy prevention services, which target consumers whose home is endangered, and use deceptive marketing practices to create the impression they are non-profit or government entities.
Typically, such companies demand an upfront payment from their marks, for as much as $1K-$3K at one such firm, touting a 97% success rate in procuring mortgage modification or foreclosure relief. That should be a red flag – legitimate non-profit companies in this field do not charge up front for their services.
Describing how they operate, the FTC wrote, “…they charge up-front fees for these “services” – fees legitimate nonprofit organizations do not charge; and they use copycat names or look-alike web sites to appear to be a nonprofit or government entity. Often, after collecting the fee, these companies do little or nothing to help consumers.
Newly confirmed FTC Chairman Jon Leibowitz had a lot of high profile company in announcing the campaign against these scammers, including Treasury Secretary Timothy Geithner, Attorney General Eric Holder, Department of Housing and Urban Development Secretary Shaun Donovan, and, on behalf of state enforcers, Illinois Attorney General Lisa Madigan.
“Scammers are taking advantage of people in a difficult situation – people who are trying to modify their home mortgages or those who are trying to avoid foreclosure. We’re enforcing the law against these scam artists; we’re putting others on notice that unless they change their ways, they’re next; and we’re working with other government agencies, non-profits, and mortgage companies to reach out to our neighbors in distress with the details of how to get help,” said Leibowitz.
RBR/TVBR observation: Although a lot of these companies tend to favor the internet for marketing purposes, they have been known to use other media to snare victims. Make sure you do your part to keep them away from your own loyal audience.