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Debt Settlement Devise New Tricks To Evade Rules

Posted By admin || 7-Jan-2011

The Apex Building, headquarters of the Federal...

The Federal Trade Commission's new restrictions on debt settlement companies has not stop some of these firms from devising new strategies so that they can still charge upfront fees to customers.

"Instead of complying with the new rules, the majority of debt settlement companies are evolving to evade them," said Chris Viale, CEO of Cambridge Credit Counseling, a nonprofit consumer advocacy group. "They are doing everything they can to continue charging these advance fees to consumers and mislead consumers."

Some debt settlement companies believe that if they contact a customer via Skype, text message or internet chat, they are not bound by the rules that forbid upfront fees.  But the FTC says that's not correct. Regardless of how the debt settlement company contacts the debtor they are not allowed to charge upfront fees.  But some debt settlement companies find the ban on upfront fees to be unfair and have even hired lawyers to act on their behalf so that they can skirt the new rules since lawyers are exempt from the fee ban.  However, the FTC says that such tactics will not protect the debt settlement company from punishment if they are found charging the upfront fees even if they are using a lawyer as a proxy.  The only way that a debt settlement company can charge upfront fees is if they give an in person sales presentation.

For debtors still considering debt settlement, be wary of agencies who are posing as law firms and those companies who have totally placed their operations offshore so that they can evade the new rules.  If you work with a debt settlement company located outside of the United States, you will not be protected from losses.

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