FTC Places New Rules on Debt Settlement Companies
The Federal Trade Commission has announced amendments to its Telemarketing Sales Rule that will prohibit debt settlement companies from charging fees in advance for settling or reducing a consumer’s unsecured debt.
In addition, the FTC imposed additional rules that will require debt relief companies to:
• Make specific disclosures to consumers, including precise details about the service they are providing, how much it will cost, how long it will take and any negative consequences a consumer may suffer by settling his or her debt through the service.
• Cease making misrepresentations as to success rates and purporting to be a nonprofit entity as well as providing evidence to consumers when making advertising claims.
• Require dedicated consumer accounts for fees and savings at an insured financial institution.
The new rules extend the Telemarketing Sales Rule to cover calls consumers make to these firms in response to debt relief advertising.
The new rules go into effect on Sept. 27, 2010, and are in response to consumer complaints ab out debt settlement relief company fraud and misrepresentation. To date, the FTC has filed 259 cases to stop debt relief providers from using deceptive and abusive practices targeting financially distressed consumers.
Before you consider working with a debt relief provider, you should consider speaking with a Jacksonville bankruptcy attorney to learn about all your options for debt relief.
Greg Gilbert
Keith Maynard
