Recently I have become aware of a (relatively) new twist on an old scam. During the worst days of the mortgage crisis, there were lots of scam artists promising to help people avoid foreclosure of their under-water mortgages. One of the scams involved using actual practicing attorneys as a front for boiler-room telemarketers selling bogus foreclosure relief. Sometimes these attorneys knew they were being used, and sometimes they didn’t. Telemarketers would call, claiming to work for the attorney, giving the attorney’s name, and they would promise that the attorney could defend against the mortgage company, getting homeowners out of a mortgage by making claims against the mortgage companies for mistakes made by the mortgage company.
The new scam is exactly the same as the attorney mortgage scam except the promises involve getting people out of debt generally, especially student loan debt. Some of the players in the attorney debt relief scam are exactly the same as the attorney mortgage relief scam.
Most of these scam operators seem to come from Florida, often from Broward and Palm Beach counties, with the center in Boca Raton. In the 80s, this area was rife with two-bit penny stock dealers and ponzi schemes scamming people out of their money.
It was so bad that the area got the nickname “maggot row” or the “maggot mile”. The Maggot Mile is alive and well in the field of debt relief scams. How bad is it?
I did a Google search on “boca raton” “debt relief” and “scam”, and over came up with over 64,000 hits on articles with all 3 terms. Widen the search to “Florida” instead of “Boca Raton” and it is over 378,000 hits. With this many operators, it is pointless to even try to list them. The players change corporate identities every few months, and they get a new attorney front man even more often.
Why these operations are illegal
If you get called by someone saying he or she is from an attorney’s office, and they are promising debt relief of any kind, ask them who their employer is – who sends them the W-2. You should know that it is unethical in most states for an attorney to pay people to solicit prospective clients on the phone with whom they do not have a prior relationship. It is unethical for an attorney to promise results. It is not only unethical but deceptive to tell people that debts can be discharged due to offensive claims when an attorney hasn’t reviewed the facts to determine in fact if there are any offensive claims. It is usually unethical for an attorney to charge a non-refundable advance fee. Attorneys are not allowed to split their fees with nonlawyers. In the operations that I’ve seen, the money goes to a third party company, not the attorney.
Debt management and debt relief companies have to give you a a lot of disclosure, have to register at the state level, and are generally barred from charging you an advanced fee. In the operations that I have seen, these attorney scams claim they aren’t debt management companies, or debt relief companies. That, quite frankly, is a lie, because they aren’t legal law practices either.
These operations usually violate state law as well as the federal Credit Repair Organizations Act. If you have given an attorney money in one of these scams, the odds are pretty good that you can get that money back, and maybe triple damages and attorney fees to boot. If these companies call you, don’t give them the time of day, much less any money. If you do give them money, call an experienced consumer attorney. If you are in Indiana, you can call me at 317-662-4529 or outside of Indiana,
use the National Association of Consumer Advocates’ “find an attorney” page to find an attorney in your area.