When you’re in a Debt Management Plan (DMP), the last thing you want is to be targeted by scam companies promising quick fixes. Unfortunately, scammers know that people in financial difficulty may be more vulnerable and some will try to exploit this by offering “hardship payments” or enticing loans to encourage you to switch debt management companies. These offers often come with strings attached and can lead to more financial trouble in the long run.
At MoneyPlus, we’ve noticed an increase in these kind of scams. That’s why it’s important to stay informed and protect yourself. In this article, we’ll show you how to spot a debt management scam, the warning signs to look out for and what to do if you’ve been targeted.
How debt management scams work
Debt management scams typically involve fraudulent companies contacting you with offers that seem too good to be true. These companies may promise to help you with a “hardship payment” or offer a cash incentive if you switch your DMP provider.
Here’s how a scam could unfold:
- You receive an email or phone call from a company claiming to offer you a payment if you move your DMP to them.
- They ask for your personal bank details, such as your account number and sort code, under the guise of needing this information to send you the payment.
- They may ask you to answer a series of questions to “confirm” your commitment to the plan, tying you into their terms.
- Once you provide your details, you’re vulnerable to fraud or, in some cases, they may even demand repayment of the “gesture” payment if you change your mind.
These companies can be very convincing, especially when you know you’re dealing with financial stress. However, it’s important to understand that reputable debt management companies will never offer upfront payments to switch your plan. In fact, such offers are a clear warning sign that you’re being targeted by scammers.
Red flags to watch out for
Here are the key warning signs that should raise red flags when dealing with offers related to debt management:
1. Unsolicited contact: If a company reaches out to you without any prior interaction, offering money or asking you to switch your DMP, be cautious. Legitimate debt management companies won’t cold call or email customers with financial incentives to switch.
2. Promises of cash payment: No trustworthy debt management company will offer you a payment or loan in exchange for joining or switching debt plans. If a company is offering money upfront, it’s likely a scam.
3. Pressure to switch DMPs: Scammers may try to create a sense of urgency by offering a limited-time payment or other benefits if you switch your DMP quickly. Legitimate companies will never pressure you into making financial decisions on the sport.
4. Request for personal information: Be wary if a company asks you for your bank account details, sort code, or other personal financial information. Scammers often use this information to steal money from your account or commit identity fraud.
For more on this, see our article Debt Management: How To Avoid Being Scammed.
How to check if a company is FCA-regulated
The Financial Conduct Authority (FCA) is the regulatory body for financial services in the UK and all legitimate debt management companies must be FCA-regulated. Checking if a company is regulated is one of the easiest ways to confirm whether they are legitimate or a scam.
To check if a company is FCA-regulated:
Visit the FCA’s official website: You can find their searchable register here.
Enter the company’s name: Search for the company’s name to see if they are authorised to offer debt management services.
Look for the company reference number (FRN): A legitimate company will provide its FCA reference number. You can cross-check this on the register to ensure it matches.
If a company is not listed on the FCA register, don’t engage with them and report their contact to the FCA or Action Fraud.
What to do if you’re contacted by a scam company
If you suspect that you’ve been contacted by a fraudulent debt management company, it’s important to take immediate action. First, reach out to your current provider to inform them about the suspicious offer – they can guide you on the next steps. It’s crucial not to share any personal or banking details with anyone unless you are completely certain of their legitimacy.
Additionally, report the scam attempt to Action Fraud, the UK’s national fraud and cybercrime reporting centre, or the FCA. Finally, make sure to keep records of any emails, texts, or messages from the scammer, as these could be valuable if you need to report the incident.
Stay safe with MoneyPlus
If you’re looking for trusted debt advice, MoneyPlus is here to help. As an FCA-regulated debt advice company, we offer transparent, reliable support for all your financial needs. Contact us today to learn how we can assist you on your journey to becoming debt-free.
