In our last blog post, we went over some of the soon-to-be implemented rules created by the Federal Trade Commission (FTC). These rules seek to protect consumers who are seeking debt relief by utilizing the services of debt relief organizations. Today, we will continue to examine the new rules and discuss why using these services is still not always in the consumer’s best interests.
One of the important changes promulgated by the FTC is the expansion of restrictions on telemarketing within the debt relief industry. The Telemarketing Sales Rules now include restrictions on calls made by consumers to debt relief companies through radio and television advertisements. Many debt relief organizations provide 1-800 numbers for consumers to call, resulting in consumer calls related to a wide range of issues and concerns.
While these new rules are helpful, many issues remain that expose consumers seeking debt relief to dangers. For example, there is still no cap on the amount of money these organizations can charge for their services. Therefore, the debt settlement process can become quite costly for consumers who already cash-strapped. Also, there are scams that claim to be government programs. Consumers are advised to contact their local Better Business Bureau, the Office of Consumer Affairs or the FTC to verify these claims.
Further, debt settlement services might not be able to achieve consumers’ desired outcome. For example, while you are saving up for your settlement, your creditors are usually not receiving any payments. As such, some might sue to recover their money even if you are enrolled in debt relief services. Debt relief organizations do not handle litigation, and you are likely to find yourself in a worse position than you were before.
Source: FOX Business “FTC Issues Final Rules to Protect Consumers in Credit Card Debt,” Emily Driscoll, 13 October 2010