Humberto Cruz

A California woman deep in credit card debt turned to a debt settlement company that immediately began deducting money from her bank account for its promised services.

After three months, the woman started getting calls from her creditors and learned they'd never heard from the company. She asked for her money back but received only $277 of $1,077 she had paid. Thanks to the Los Angeles County Department of Consumer Affairs, she got the rest.

The lesson: Many debt settlement companies collect their fees long before they contact creditors and keep the money even if they never settle the debt. Better to negotiate directly with your creditors or seek advice from a local non-profit credit counseling service (check with the National Foundation for Credit Counseling at www.nfcc.org or 800-388-2227).

In Ohio, homeowners in danger of losing their homes to foreclosure received automated calls from a company offering to help obtain new loans or loan modifications. After paying $1,800 or more, they got nothing.

Fortunately, the state attorney's general office obtained a judgment against the firm. To avoid mortgage rescue scams, contact the lender directly or call 800-569-4287 to find a government-certified housing counselor.

Another horror story: An Arizona couple got a call from a telemarketer saying they had "won" a Bahamas cruise and three days at a Fort Lauderdale hotel. To hold this vacation "package," they had to agree to have $538 charged to their credit card and attend a timeshare presentation.

Feeling rushed and pressured, the couple agreed. But when trip materials came in the mail, they learned there were "fees" for the hotel stay and for a supposedly free rental car. Research on Web sites showed the hotel received poor guest ratings and the couple could book a Bahamas cruise on their own for $100 a person. They contacted the Florida Department of Agriculture and Consumer Services, which got their $538 back.

In another case, a 92-year-old man filed a complaint with the Florida department against 24 telemarketers who promised to resell his unwanted timeshare. He paid them a total of more than $74,000, far in excess of the original cost of the timeshare, but nobody sold it for him. Some telemarketers have agreed to refund his money and the Florida department is seeking refunds from surety bonds some of the others have on file.

During tough economic times, "many people are trying to get rid of timeshares because they cannot afford to pay the monthly fees" for things such as maintenance and property taxes, said Anna Huddleston-Aycock, president of the North American Consumer Protection Investigators (NACPI). If you want to sell a timeshare, avoid resale companies that take upfront fees whether or not the timeshare is ever resold.

All these cases are among dozens detailed in an annual study of consumer complaints conducted by the Consumer Federation of America, the National Association of Consumer Agency Administrators and the NACPI. The 33 state, county and city agencies from 18 states that responded to a survey received more than 300,000 complaints and obtained nearly $110 million in restitution or savings for consumers last year.

They had to do in the face of widespread budget and staff cuts and economic conditions that helped spark a rise in complaints, in particular bogus offers to avoid foreclosure.

Best advice? "When in doubt, check it out," the study recommends. "If you're not sure what your rights are or you think something might be fishy, ask your state or local consumer agency for advice."

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Personal Finance - Hard Times Triggering Spike in Consumer Fraud

© Humberto Cruz