Can a company wipe my credit card debt? Is this a scam?

I've been contacted by a company saying they could wipe my credit card debt because my provider increased my limit without my consent.

They've asked for money upfront but said they can guarantee it because my provider broke the law. They even said that we could pay on the credit card so when it's cleared we'll get our money back. Is it a scam?

A credit card company wouldn't be breaking the law to increase a cardholder's limit without their consent.

So if a company calls you offering to wipe your credit card debt because a provider has broken the law in this way, the chances are it's probably highly likely to be a scam.

Providers are allowed to change credit limits whenever they want to.

However, there is much besides this which causes a tell-tell sign that something is amiss.

Demanding upfront payments along with convenient requests to pay the money on the credit card where it will be wiped off as well seems an impossibly wonderful - and therefore highly suspect - offer.

In these kind of situations, it's recommended to contact Consumer Direct either through their online report a scam service or by calling them on 08454 04 05 06.

Writing-off debts

There is a multi-million pound industry dedicated to writing off debts from before April 2007 by exploiting loopholes in the Consumer Credit Act.

The problem is that for a few years some credit card debts actually were 'written off' as a result of lost or unfair agreements but, following some landmark cases, credit card providers are much less likely to agree to this and the Office of Fair Trading recommends that that companies making these promises are disregarded entirely .

Spotting a scam

When approaches taken by some companies appear a little more unusual though, it's often a case where criminal gangs have hooked onto media publicised legal loopholes in an attempt to con people out of money.

The fact that credit card providers are able to change their customers' credit limits whenever they choose has long been contested but has never been against the law.

Credit limits

In fact, this year's Credit and Store Card Review saw the government finally act upon some of the injustices of the credit card industry.

They have passed several amendments which will become official in February 2011, in the new Consumer Credit Directive.

By these laws, a consumer is allowed to decline changes to their credit limit within 30 days of the change.

However, this amendment will not come into play until early next year, so at the moment a provider increasing a cardholder's limit would not be at fault.

Credit card fraud

Being conned isn't anything to be ashamed of - it happens every day.

In fact, as recent credit card fraud figures show, criminals and fraudsters have redoubled their efforts to entice money from our unsuspecting hands.

They seem to grow wilier by the day, tricking even the most careful individuals.

3 million people fall victim to scams every year and lose an average of £850 each. To avoid these fraudsters it is essential to be constantly on your guard, especially where your bank details are concerned.

There are also a few telltale signs which indicate a scam.

Firstly, if the offer appears unexpectedly from an unknown source then it should certainly be questioned.

Offers that are too good to be true, as well as ones which give you a very short amount of time to make a decision are also likely to be scams.

Most importantly, if you are required to hand over money you should highly question the offer.

A legitimate company would not usually ask for an advance sum and would certainly never ask for bank details.

The Consumer Direct site has a lot more information about detecting and avoiding scams and they are also the ideal people to get in touch with when you think you have found or been victim to one.

Legitimate ways to clear debt

There are many legitimate ways to lessen and absolve debt.

A popular option is the 'debt relief order', which is a cheaper alternative to going bankrupt and will leave you debt free.

However, there are many requirements to be able to apply for one of these, for example, the debts must be lower than £15,000 and you must have a low income.

A far better option - if it's open to you - could be transferring your debt onto another credit card.

Moving the debt to a 0% balance transfer credit card or life of balance transfer credit card could allow you to clear the debt without also having to pay high interest rates.

So don't fall for an impossibly miraculous offer, look elsewhere and you will find many legitimate ways to reduce pressing debt problems.

For more serious difficulties free advice agencies can help, such as Citizen's Advice and CCCS .

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