BBB Warns of Credit Repair and Debt Relief Scams as Tax Season Begins

As tax season gets underway, the Better Business Bureau (BBB) is urging consumers to thoroughly research credit repair and debt relief services before engaging with any company. These services, while potentially helpful, are frequently targeted by scammers, particularly during times of financial stress.

Understanding Debt-Related Services

Several types of debt-related services are available to consumers:

• Credit Counseling: These firms offer educational programs to help individuals resolve financial issues.
• Debt Consolidation: Businesses provide loans to pay off debts in a single lump sum.
• Debt Relief/Settlement: Companies negotiate payment terms with creditors.
• Credit Repair: Agencies promise to correct inaccuracies on credit reports, such as bankruptcies or late payments.

The Rise of Debt-Related Scams

While not all credit repair businesses are fraudulent, those promising quick fixes or unrealistic guarantees often are. Michelle L. Corey, BBB St. Louis president and CEO, warns, “Finances are often the root cause of major stress for many people, and for that reason, a promise to magically fix your debt or credit score can be tempting. Credit relief takes time and work. Someone promising you instant results probably doesn’t have your best interests at heart.”

Scammers frequently charge fees for services consumers can perform themselves or produce promises they cannot retain. It’s important to remember that while consumers have the right to correct inaccurate information on their credit reports, no legitimate service can remove accurate negative information.

Recent Scam Statistics

In 2025, the BBB received reports from 422 people regarding debt repair scams, with a median loss of $450 per victim. Phone calls remain the primary method scammers use to contact potential targets. A 2023 BBB study revealed that consumers reported losses totaling $2.4 million due to debt-related scams between 2020 and 2023. One Missouri consumer in Hollister lost $1,550 in March 2025 to a credit repair scam after being contacted by scammers who created a convincing website and social media presence, complete with false testimonials.

Red Flags to Watch For

The BBB outlines several warning signs to consider when evaluating a credit repair or debt relief service:

• Poor Reviews/Complaints: Check BBB.org for patterns of complaints and reviews.
• Upfront Fees: Be wary of companies requesting payment before providing services or demanding immediate bank information. In the U.S., fees for credit repair and debt relief are generally only permissible after services have been rendered.
• Guaranteed Results: No company can guarantee debt elimination or credit score improvement, especially without reviewing your financial situation.
• Unrealistic Promises: Avoid services offering to remove negative information from credit reports or suggesting obtaining a new identity or Employer Identification Number (EIN) instead of a Social Security number – the latter is illegal.

Service-Specific Red Flags

• Debt Consolidation: Avoid companies pressuring you to stop paying debts to begin settlement or claiming they can settle with all creditors.
• Debt Relief/Settlement: Be cautious of companies using credit reports to consolidate debts without discussing it with you, applying high-pressure tactics, or concealing consolidation fees.
• Credit Repair: Beware of companies failing to provide broad advice for improving credit, guaranteeing a higher score, or making sweeping promises about the issues they can resolve.

Reporting a Scam

Consumers who believe they have been victimized by a scam can report it to:

• BBB Scam Tracker
• BBB.org (file a complaint)
• The Federal Trade Commission (FTC)
• Their state attorney general