A case currently pending in Illinois is the latest example of why consumers need to be careful when seeking outside companies to assist with their debt management problems.

The state’s attorney general, Lisa Madigan, announced this week that she is filing suit against a telemarketing company that allegedly scammed consumers out of money they had paid with the expectation that they would be able to get lower credit card interest rates.

“During these difficult economic times, consumers are understandably looking for ways to ease the burdens of rising debt. But I urge consumers to be wary when solicitors try to make tempting claims of ‘immediate’ savings. In such cases, the schemers rarely deliver and usually leave consumers in an even worse financial situation than before,” said Madigan.

The telemarketing company in question is accused of charging consumers setup fees of up to $1,590 with the claim that negotiations with credit card companies for lower rates would be forthcoming. Madigan noted that the victims would receive documentation on the scam’s terms and conditions only after paying the fee, and that many people had difficulty getting refunds when the lower rates did not materialize.

A common red flag when it comes to debt management scams is a requirement for consumers to pay an up-front fee. People are also warned about companies that make unrealistic promises, such as being able to make debts disappear entirely, while another common scam sign is advice to stop paying creditors.

In some cases, people may not realize that they are severely damaging their credit score by following the bogus advice of an unscrupulous debt company. Since consumers are also still subject to late fees and other penalties if they follow a company’s advice to stop making payments, they often end up in worse debt than they were before.

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