Debt Fraud
Bad Debt Consolidation by splinder
Filed under Debt Management
In a survey conducted by the market research and consulting firm Javelin Strategy & Research in 2008, 37% of the respondents said that they had reduced the use of credit cards for purchases made over the net. Javelin Strategy & Research had projected only a 5.6% CAGR (compound annual growth rate) for online credit card payments between 2008 and 2013. This is in comparison to the expected growth of 14.5% for debit cards, 14.5% for PayPal, 23.5% for private-label cards and 22.8% for on-the-spot credit services like Bill Me Later.
The reduction in the use of credit cards by online consumers is the result of the reports on identity theft and data breaches. This is collaborated by a report released by consulting firm Gartner Inc, which mentioned that 39% of the consumers have changed their payment behavior online because of security concerns. Identity theft and data breaches form the basis of debt fraud.[br]
Types of Debt Fraud
Debt frauds are often conducted with the help of stolen personal information, such as credit card number and social security number (SSN). Consumers are plagued by the following types of debt frauds:
- Debt collection: In this type of debt fraud, you can receive a call from a person informing you of an outstanding debt with his/her company. S/he may stress that you have a maximum of 24 hours to pay back the debt or you may receive an arrest warrant. Usually this threat makes unsuspecting people sit up and take immediate actions to repay the debt. In their haste, they fail to check on the identity and authority of the person. Even if they make inquiries, these fraudulent debt collectors have their personal information, making it hard for people to judge their authenticity.[br]
- Debt relief companies: These “so-called” debt relief companies inform people about how their debt can be eliminated via the services of these firms. The “company” may express its willingness to negotiate the fees with credit card companies. All the consumer needs to do is to pay the company a specific sum every month and it will take care of the distribution of funds directly to their credit card providers. Although this offer might seem irresistible to several people as this would mean no hassle of phone calls, these firms might just continue to pocket your money until you call to complain.