Consumer Alert: The "Credit Card Termination" SCAM

The Debt Diary here at DebtHelpandAnswers.com is to provide you with useful information. Selecting a debt solution is an important financial decision. There is a relatively new type of scam that has spread via the web. It usually goes by the name "Credit Card Termination" or some variation on that name, and victims are paying thousands of dollars for this bogus service. It has been reported that victims are being billed up to $11,000 in this scam, and fees of $2,500 to $5,000 are quite common.

This scheme we are describing here has absolutely nothing to do with legitimate Debt Settlement. The most straightforward way to distinguish the "Credit Card Termination" scam from legitimate programs is to realize that the con artists make an impossible claim right up-front. Based on a misinterpretation of obscure banking and accounting rules, they claim that you really don't owe any money to the credit card banks!

With Debt Consolidation or Credit Counseling, you pay back all of your debt balances in full. Debt Settlement you pay back a lower amount (usually 50% or less), while the creditor agrees to forgive the remaining balance. In contrast the promoters behind the "Credit Card Termination" scam claim that you don't need to pay anything at all, except their huge fees, of course! They claim you can wipe away your debts forever with a few simple documents that magically prove you really didn't borrow any money from you creditors.

This scam has its roots in the income tax protest movement of the 1970s, where people were claiming that paying taxes was unconstitutional. The insider information in the collection industry calls the "Credit Card Termination" scam "monetary protest movement". The common theme with these programs is that our banking system prohibits banks from lending out their own money. It begs the question, how does a credit card bank extend credit? The protesters claim that the credit card agreement itself becomes a form of money the moment you sign it. The scammers are trying to put the idea out there that, the bank "deposits" your agreement as an asset on their books, and then any credit you use is offset as a liability against that asset. The core concept here is that you literally borrowed your own money from the credit card bank. The scam promoters claim that all you need to do to wipe out your debt is demand your original "deposit" back from the bank, which will be offset against what you borrowed. Do not be fooled with this 'fuzzy logic' and 'smoke and mirrors' scam.

There is simply no comparison between this scam and the legitimate technique of Debt Settlement. Through the process of negotiation, a compromise is worked out on your behalf with each of your creditors. It's an honest and ethical solution to excessive personal debt that allows for a win-win scenario between you and your creditors. The key to success is to stay in communication with your Settlement Coach and honor your settlement agreement.

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