Debt relief and consolidation frauds still uncontrolled after the downturn

The variety of debt reduction and debt consolidation companies has increased during the last few years. There surely have been more commercials promoting them on the television. Though several of these corporations are reliable, there are a number that are scams. Not all of these debt relief businesses seem to have gotten the memo.

Not paying attention to Federal Trade Commission rules

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 businesses. KNDU is a Washington state NBC affiliate. According to KNDU, debt servicing businesses are not allowed to misrepresent themselves, have to make information available at first and aren’t allowed to ask for advance fees. Businesses have to give customers realistic estimates of how much money they could conserve and disclose exactly what fees are involved in the service. Companies aren’t following the laws right now.

Fine for a business

Laws for debt services weren’t being followed by Freedom Debt Relief. This is what the states of New York and Washington found in a sting, WalletPop explains. Consumers in those states were misled by the California firm. In both cases, the business settled. It settled for $2 million in payments in consumers. The company is dealing with a class action lawsuit right now. It also made comparable settlements with four other states. Two companies were illegally “robocalling” and leaving messages for customers that were automated, report the Wall Street Journal. This won the Federal Trade Commission two large settlements against the businesses. Dynamic Financial Group and Advanced Management Services NW were robocalling customers and said that with an upfront fee, they could reduce a debt. The corporations both would send a card telling customers that they simply need to pay their bills on time. Advanced Management Services did offer a refund if it did no! t work though.

Don’t ever expect it to be that simple

With debt settlement companies, “if it looks too good to be true, it most likely is” works really well. Any company that claims it will take bad things off your credit for “pennies on the dollar” is a scam, according to both the Federal Deposit Insurance Business and Federal Trade Commission. All of the debt settlement companies aren’t allowed to ask for upfront cash. They have to change or reduce your debt before they ask for cash. There are also a lot of nonprofit debts counselors who can help customers come up with a debt reduction plan. The FDIC advises consumers 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 in your area could 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/