As an entrepreneur, you’re well aware that even a solid business plan and a great product won’t protect you completely from unexpected downturns. Markets change, your costs can rise — and suddenly, you’re struggling to meet your obligations. This is when you may start noticing sales pitches from companies that offer a quick and easy solution to your stress. Here’s a closer look at how those dangerous scams work, and why they represent a threat to your financial health.
How ‘Debt Relief’ Companies Work
Hoping to lure business owners with phrases like “debt relief,” or “corporate credit counseling,” these companies advise you to break your agreement with your funding provider (like Gibraltar), and stop all further payment. They promise that if you let them negotiate on your behalf (for a fee, of course), they’ll reduce your payments by 50 percent or more. These con artists even suggest that their special magic can reduce the overall amount you owe. Meanwhile, they have no stake in your financial success because they earn their income from the fees you pay them for their “services.”
Why These Offers are Dangerous
Once you get past the rosy sales language in the pitches, you’ll discover some alarming fine print. Debt relief companies are usually careful not to guarantee any actual results in exchange for the fees you pay them. We’ve even seen some of these so-called advocates convince business owners like you that they’re working on your behalf — and then never even contact us. That’s not a service at all — it’s just dishonest. Meanwhile, you’re left with the same obligations you had previously, and while you thought you were acting responsibly, your funders have heard nothing but crickets.
Scam Debt Restructuring in the News
We were saddened, but not surprised, to learn of a New York case in which several people were arrested for defrauding small business owners with promises of debt relief. In one instance, they told a business owner they could reduce the amount she owed by 75 percent in just two days. Using dozens of different company names, these scammers convinced over 100 entrepreneurs to provide access to their business bank accounts. Drawing out weekly payments (amounting to over $1 million total) from these accounts, the “debt relief” agents never contacted any creditors or acted on behalf of the business owners in any way. They merely pocketed the cash until their scheme was detected by the Department of Justice.
Another recent example involves a fake legal services company that charged a merchant $100,000 to supposedly eliminate $400,000 worth of debt. However, when the retailer was sued by their funder for nonpayment and subsequently hired a real lawyer, they found that the so-called “legal services” weren’t even licensed in the region. Furthermore, the supposed “debt” was actually a negotiable merchant cash advance and the scammers had never even contacted the funder.
We’re Always Here to Talk With You
At Gibraltar, we’re committed to supporting you. After all, we’ve already advanced funds because we believe in your business. We wouldn’t risk our money if we didn’t. If you encounter financial distress, just let us know. Our agreement with you allows you to ask us to adjust your daily remittance to us. But we simply will NOT negotiate YOUR agreement with a company who has not invested their money right along with yours, like we have — and who may be engaging in fraudulent activity.
Here’s our promise to you — and it’s a promise you can bank on: If your business is experiencing hard times, we’ll work with you to find a solution. There’s no need to involve a fraudulent outsider who merely pockets huge fees and encourages you to break your word. If you’d like to talk with us about this, just give us a call anytime at (888) 963-6130.