Debt reduction and consolidation frauds still widespread after the downturn

Debt relief and consolidation corporations seem to have spread like wildfire in the past few years. Not all of these businesses are exactly trustworthy, though the majority is perfectly fine. Despite elevated regulations, there are still a lot of fraudulent debt reduction corporations in existence.

No use having Federal Trade Commission regulation for crooks

To be able to stop fake debt settlement and debt settlement businesses from stealing, the Federal Trade Commission started up many new rules. This was over half a year ago. 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 can’t misrepresent themselves in any way. Companies have to give customers realistic estimates of how much money they could conserve and disclose exactly what fees are integrated in the service. Companies aren’t following the laws right now.

Large debt relief business busted

WalletPop reports that the states of Washington and New York did a sting with Freedom Debt Relief and found out it did not follow debt services’ laws. The firm is located in California. It misled consumers in the states mentioned. In both cases, the company settled. It settled for $2 million in payments in customers. The company is dealing with a class action lawsuit right now. It also made similar settlements with four other states. The Federal Trade Commission, according to the Wall Street Journal, recently won large settlements against two debt management companies illegally “robocalling” customers with automated phone messages. Dynamic Financial Group and Advanced Management Services NW were robocalling customers and said that with an upfront fee, they could reduce a debt. If it didn’t work, Advanced Management Services said it would refund money although the businesses both would keep the cash and tell consumers that they need to pay their ! bills on time to lower debt.

It may not be true if it looks that way

The old maxim that “if it looks too good to be true, it probably is” holds true when it comes to debt settlement companies. The Federal Deposit Insurance Company and Federal Trade Commission both warn that any business guaranteeing to remove negative items from credit states or a settlement for “pennies on the dollar” is most likely a scam. 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. Just go ahead and check for a nonprofit debt counselor instead. There are several of them that can help you do a debt reduction plan for free. Before going to any for-profit debt reduction services, try a not-for-profit credit counselor first, the CFIC suggests. You are able to get help from the National Foundation for Credit Counseling. This will be where financial advisors as part of your area can be found.

Citations

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/