Federal Trade Commission Bans Upfront Fees Charged By Debt Settlement Firms

The U.S. Federal Trade Commission (FTC) has announced that it is banning
debt settlement firms and other debt-relief companies from charging advance
fees for their services. FTC Chairman Jon Leibowitz, said that new ban
is part of a larger modified rule that will require these debt settlement
and debt-relief companies to disclose to customers an estimate of how
much time and money it will take the customer to pay off debts using their
services. Leibowitz said the new rule is being implemented as part of
a larger effort to protect vulnerable debt burdened Americans from predatory
debt settlement and debt-relief companies.

“Too many of these companies pick the last dollar out of consumers’
pockets,” Leibowitz said in a statement at the White House announcing
the changes. “Far from leaving them better off,” the companies
“push them deeper into debt, even bankruptcy.”

Already thirteen million Americans are saddled with at least $10,000 in
credit-card debt, with an average of $16,000 in total debt per household,
according to FTC Commissioner Julie Brill. And for many debt settlement
and debt-relief companies, those debt-ridden Americans are easy pickings
to be exploited for profit. This past year alone has uncovered a slew
of corrupt debt settlement and debt-relief companies who have been sued
by their customers for falsely advertising that they could stop creditors
and help debtors repay their bills. But the reality is that debt settlement
and debt-relief companies really have no power over creditors. Many creditors
refuse to even deal with these middle-men when trying to resolve unpaid
debt issues. Some debtors have even found themselves embroiled in creditor
lawsuits while they were participating in debt settlement and debt-relief
plans that were suppose to help them; but which instead only exacerbated
their problems.

By | 2017-12-13T00:29:26+00:00 August 11th, 2010|Debt Consolidation|Comments Off on Federal Trade Commission Bans Upfront Fees Charged By Debt Settlement Firms