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Debt Settlement Company Abuses Continue Despite New Rules

Posted By admin || 25-Jan-2011

The Apex Building, headquarters of the Federal...

Consumer advocates are calling on the FTC to beef up enforcement of new rules governing debt settlement companies after realizing that many debt settlement companies were coming up with new tactics to circumvent the regulations.

Since the new rules ban companies that use telemarketing as a means to sign up new customers from charging upfront fees for their services, some companies have attempted to circumvent the rules by running ads that urge potential customers to visit a website to sign up for debt settlement services.

Instead of telemarketing calls, consumers may be hit with spam e-mails saying they may qualify for debt relief services or asking them to complete surveys about debt.

After the debtor hands over their information to the debt settlement company via the internet, they are either prompted to call or the company calls them to make the pitch for debt settlement services. But the FTC says that it doesn't matter how the interaction between customer and debt settlement firm begins, if the pitch for debt settlement services is made over the phone then they are covered by the rules.

FTC attorney Evan Zullow says the new rules are stronger than many people think.

"The definition of telemarketing is really quite broad," he says. "Even if a consumer goes to a website to get information, the consumer at some point has to have a telephone call with the company. During that call, the primary pitch is made for debt relief services. Just because some component of the interaction with the consumer is made over the Net, that doesn't exclude it."

At the point that a consumer calls a debt settlement company or the company calls a consumer, "it would be covered by the rule," Zullow says.

Categories: Debt and Tax Relief
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