As economy falls, financial ploys rise

When the economy falters, it’s prime time for ploys that claim to help consumers out of money messes.

Consumer Reports recently catalogued some troublesome offers being promoted.

Foreclosure fiasco

Public notices of foreclosure proceedings usually trigger mail, phone and even door-to-door solicitations. But consumers should steer clear of any company that initiates contact, demands a fee before providing services or advises cutting contact with the mortgage company.

Instead, Consumer Reports’ experts recommend seeking legitimate free or low-cost help as soon as possible. Contact a housing counseling agency certified by the Department of Housing and Urban Development (www.hud.gov/foreclosure or 1-800-569-4287). Advice is also available at the Homeowner’s Hope Hotline, at 1-888-995-4673.

High-fee debt settlement

Debt-relief companies say they’ll work with creditors to reduce total debt and get it paid off. Yet regulators say that under the typical arrangement, companies charge upfront fees totaling 15 percent of the debt to be settled, a monthly service fee of $50 and if they do reach a settlement, a contingency fee of 20 percent or more of the amount they’ve saved.

Instead, consumers struggling with credit-card debt should negotiate directly with creditors. Credit-card issuers are reaching out to offer repayment plans to card members carrying significant debt loads.

A credit card for anyone

The pitch: “If you have been turned down for credit recently because of your credit score, Continental Finance is here to help you with the second chance you have been waiting for.”

But the “second chance” provided by Continental Finance Classic MasterCard could cause cardholders’ credit scores to dive further. Designed for borrowers with subprime credit, commonly defined as a credit score below 660, the card comes with fees galore.

A better alternative is a secured credit card, which requires a cash deposit of at least $200 to $300 as collateral.

Write to: Consumer Reports, 200 Madison Ave., New York, NY 10016; on the Web at www.consumerreports.org.