There are a lot of different scam artists out there who want to take your hard-earned money. Some pretend to be long-lost relatives who claim they're in trouble and need your help. Others claim they're from the Internal Revenue Service (IRS) and threaten to sue you if you don't send them money. You may also be contacted by someone claiming to hold a prize in your name—one that can only be released if you pay a fee.
Being scammed by some of these fraudulent money-making schemes can be a hard pill to swallow. But it's even worse to be duped again—especially by someone who promises to recover your assets. Fake asset recovery firms solicit victims of financial scams, promising they can recover the lost funds for a fee in advance. It sounds good, except for one problem—they do little to nothing to help and disappear with the fee. Learn more about how these people work and what to look out for to avoid being taken in by these professional scammers.
- Scammers often sell lists of names and contact numbers of people who have already been victimized.
- Most so-called asset recovery companies cold-call these previous victims and promise to act on their behalf.
- You'll know a company is scamming you if they ask for upfront fees, use aggressive tactics, promise inside connections, and demand secrecy.
How Asset Recovery Cons Work
It isn’t clear how the scammers get wind of the identities of unfortunate fraud victims. Most scammers compile a list of people who are duped and sell that information to others including asset recovery scam artists. These people cold-call previous victims who've 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 hundred 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 perform services. But these are usually things the consumer can do for free. For instance, a person who uses 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 so-called legal expertise. 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.
These fraudulent companies will often submit a complaint to an agency like the Consumer Financial Protection Bureau (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.
Asset recovery firms may promise to do things for a fee—things you can do for free like file a complaint or contact your bank.
Here's an example. It’s becoming such a problem that the CFPB issued an advisory in 2016 warning older consumers to be on the lookout for this type of con game after receiving numerous complaints. In 2015, the Federal Trade Commission (FTC) banned an outfit called Consumer Collection Advocates from selling any recovery services after the agency discovered 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 timeshare resale and precious metals investment frauds.
Warning Signs of a Con
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. Any requests for payment in advance should set off alarm bells. Most reputable firms don’t charge a fee until services are rendered.
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. Alarm bells should go off if the company doesn't afford you that time.
- 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 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 CFPB and the FTC.
The Bottom Line
With money-making scams becoming a fairly 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. At best, this schemer will charge you for actions you could do on your own for free but 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 is to hang up the phone.