Advertisements on TV may promise to modify car loans and keep the repo man at bay, but some companies fail to carry through on their promises. To prevent fraud the Better Business Bureau (BBB) recommends that cash-strapped consumers save their money by trying to work out a deal with the lender directly before paying out hundreds in upfront fees to a loan modification company.

High unemployment in the country means that many families are struggling to make ends meet and the number of repossessed cars continues to rise. More than 1.9 million cars were repossessed by lenders in 2009 according to Manheim Auctions. Some businesses are seeing an opportunity in the increased number of repossessed cars and claim that, for a large up-front fee, they can work with the lender to modify the terms of the loan for the borrower.

“Auto loan modification companies are following in the footsteps of unscrupulous fraudulent mortgage modification companies which have long targeted struggling families who are just trying to stay above water,” said Alison Southwick, BBB spokesperson. “Some companies may make it look like they are tossing out a life preserver, but they end up pulling many borrowers deeper underwater.”

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