During the last few years, many may have noticed a greater number of advertising campaigns and other media relating to debt relief or debt settlement businesses. Some of these corporations are on the level and are trustworthy. However, many of them are scams. Many debt relief businesses still try to evade the laws regarding debt services.
Rules in the Federal Trade Commission disregarded
More than half a year ago, the Federal Trade Commission created new regulations to help deal with the growing number of complaints about ineffective or fraudulent debt settlement and debt settlement companies. Debt servicing corporations, according to KNDU, an NBC affiliate in Washington state, are prohibited from asking for an advance fee, have to make specific information accessible up front and cannot misrepresent themselves in any way. Businesses have to give customers realistic estimates of how much money they could save and disclose exactly what fees are incorporated in the service. There are still some businesses not following this law. This is a problem.
Large debt reduction company busted
Laws for debt services were not being followed by Freedom Debt Relief. This is what the states of New York and Washington found in a sting, WalletPop explains. The firm is located in California. It misled customers in the states mentioned. A settlement of about $2 million was paid to customers in both cases by the business. Four other states had settlements just like this with the business in the past and a class action lawsuit is involved with the business also. The Federal Trade Commission, according to the Wall Street Journal, recently won large settlements against two debt management businesses illegally “robocalling” customers with automated phone messages. The two businesses promised reduced debt for a hefty fee when robocalling people. These businesses were Dynamic Financial Group and Advanced Management Services NW. Advanced Management Services offered a refund if efforts were unsuccessful, but both businesses would just pocket the cash and send a c! ard telling consumers to pay credit card bills on time.
Too great to be true
Do not forget that “if it looks too great to be true, it most likely is.” This is especially true with debt settlement company promises. The Federal Trade Commission and Federal Deposit Insurance Company agree on one thing. They both suggest anything that says you can pay “pennies on the dollar” to get something removed from your credit is a scam you need to keep away from. Also, it is illegal for any debt settlement or debt reduction business to ask for any money whatsoever until after the debt is reduced or somehow changed. Customers can get a debt reduction plan from nonprofit debt counselors too. The FDIC advises customers look at a not-for-profit credit counseling service before looking at any for-profit debt reduction service. You can get help from the National Foundation for Credit Counseling. This will be where financial advisors with your area can be found.
Information from
Walletpop
walletpop.com/2011/03/08/freedom-debt-relief-agrees-to-pay-back-consumers-after-accusatio/
KNDUO/p>
kndo.com/story/14696586/how-new-federal-debt-relief-rules-protect-consumers
Wall Street Journal
online.wsj.com/article/BT-CO-20110526-711657.html
FDIC
fdic.gov/consumers/consumer/news/cnfall10/debtoverload.html
FTC
ftc.gov/bcp/edu/microsites/moneymatters/dealing-with-debt-relief-services.shtml
NFCC
nfcc.org/
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