How to Avoid Being Scammed by Asset Recovery Companies

It's bad enough to be duped by a fraudulent money-making scheme. But it's even worse to be duped again – and by someone promising to recover your assets, no less.

Fake asset recovery firms solicit victims of financial scams, promising they can recover the lost funds for an advance fee. It sounds good, except for one problem: They do little to nothing to help and disappear with the fee in hand.

It’s becoming such a problem that the Consumer Financial Protection Bureau (CFPB) issued an advisory in February 2016 that warned older consumers to be on the lookout for this type of con game after receiving numerous complaints. In October 2015, the Federal Trade Commission (FTC) banned an outfit called Consumer Collection Advocates from selling any recovery services after the FTC found it falsely claimed it could recover money for consumers who were the victims of schemes:

The firm had been collecting fees from people, many of them elderly, who had already been hurt by time share resale and precious metals investment frauds. 

It isn’t clear how the scammers are getting wind of the identities of unfortunate fraud victims. But they cold-call people who have lost thousands of dollars and claim their expertise can get the person their money back. Victims, usually desperate to recoup their losses, willingly pay the upfront fee, which can be anywhere from several hundreds to thousands of dollars, putting them in a bigger financial hole. Then, the so-called asset recovery people never manage to recoup any assets. When the victims try to follow up, they get strung along – or can't even get anyone on the phone.

In a less-brazen variant on the scheme, the asset recovery company will actually perform services – but they are things the consumer can do for free. Take, for example, a person who used a credit card to pay for something in the original scam. The asset recovery company will dispute the charge with the credit card company on their behalf, and charge hundreds of dollars to do so, for its time, trouble and "legal expertise." Talk about money for nothing! To fight an item, all it takes is a phone call to the card issuer, which has entire departments set up to handle this sort of thing, at no expense to the cardholder.

Or, these fraudulent companies will submit a complaint to an agency like the CFPB and ask you for funds to cover the costs to do so. Except, the CFPB is a public regulatory agency, which doesn’t charge a fee. Other con games include filing claims that are too old to be valid from a legal standpoint or claims without the proper supporting documentation. 

How can consumers spot a fake asset recovery company? According to the CFPB, a telltale sign that something is amiss is if the company asks for an upfront fee. Most reputable firms wouldn’t charge a fee until services are rendered and any requests for payment in advance should set off alarm bells.

Consumers should also be wary of any firm that:

• uses aggressive, "act now" tactics. As a consumer you have the right to take your time and seek guidance when making a financial decision; if the company won’t afford you that time, alarm bells should go off.
• claims to have inside information or government connections that can help you recover your lost assets. As it costs nothing to file a complaint with a federal agency, any firm that says it has special access or contacts is probably lying.
• demands secrecy. If the company discourages you from seeking supporting information or advice from friends, family members or legal advisors, it is likely trying to trick you into paying for a useless service.  

If you think you were the victim of a recovery asset scam, the good news is you have some recourse. If you used a credit card or debit card to pay for a service, contact your bank or credit card company immediately to let it know of the fraud and to prevent additional charges from appearing on your card. If you file a dispute within 60 days, you may be able to recoup your losses. You should also contact local law enforcement and file complaints with the FTC and the CFPB.

With money-making scams a pretty common occurrence these days, consumers have to be on the lookout for any attempts at financial fraud. That includes the ultimate addition of insult to injury: a scammer who targets victims of a previous con, luring them in with bogus promises it can recover all the lost money – if they pay more money! At best, this schemer will charge you for actions you could do on your own for free; at worst, they will collect funds for doing absolutely nothing.

Any firm that wants you to pay upfront, claims to have an in with regulators and law enforcement agencies, pressures you, or requests confidentiality should raise red flags. The best action to take if you receive a call from one of these characters, especially if it's unsolicited: Hang up the phone.

(See When, Why and How to File a Complaint with the CFPB.)