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Car Loan Modification Scams
A new breed of scam began brewing in 2008 to take advantage of financially distressed debtors. Several car loan modification scams developed, some on a national scale.
These companies claimed that they could work with your lenders and modify your car loans so that you could make lower car payments. However, they grossly misrepresented their services and effectiveness. At most, they sent form letters on your behalf with near-zero results. Meanwhile, if you stopped paying your lender, you risk repossession of your vehicle.
Here are some of the scams that have been revealed:
Case Study: Auto Relief Group LLC
Jeffrey Taylor, the Director of Sales at Auto Relief Group was quoted in a January 2010 press release:
Auto Relief Group provides you with the hands on help in restructuring your loan. ARG will work with your current lender, acting as a trusted third party and a valuable "buffer" between parties involved. Since ARG works on "success" basis, our interest is entirely aligned with yours. If we cannot help you negotiate acceptable terms for your loan, we don't feel like we have earned our fee and you owe us nothing.
It was reported by Debtors Unite that the Auto Relief Group scam was shut down by regulators. It is now in receivership and it is doubtful that clients will receive any substantial refunds of what they paid in. Meanwhile, many of them have lost their cars, falsely believing that Auto Relief Group could prevent repossessions.
Since Auto Relief Group was unable to afford the renewal of their lease, the Receiver Daniel Stermer is having substantial challenges to identifying assets and moving forward with partial refunds. Telephone numbers are disconnected due to nonpayment. If you are owed money by Auto Relief Group, it is unlikely that you will receive a partial refund at some point in the future. Any refund is expected to be a fraction of what you paid in, and it could take two years or more to complete the process!
According to an investigation by Florida Attorney General Bill McCollum, investigators determined these lenders had previously notified Auto Relief Group of their non-negotiation policies. Any car loan modification firm that claims to have relationships with lenders to modify your loan is falsely advertising their services. They cannot modify your loan, and you are likely throwing your money away!
The investigation showed that nearly all of the few clients who were able to gain "modifications" were only able to receive a minor deferment in payment, not a reduction in interest or a lower payment. This is what they could have done on their own, without paying the $299-$375 in upfront fees that should have instead been paid to their lender.
