New FTC Laws Aimed To Prevent Worrisome Practices

No matter how honestly the business policy is framed there is no guarantee that a company will abide by it to the last word. It is for this reason you are suggested to do through research before selecting any service provider. It is even more required when it comes to money matters especially when you are in debts that are bothering you constantly and you want to get rid of it.

To prevent your vulnerable financial situation from becoming more fragile and worrying, you must know about the worrisome practices that are followed by the debt settlement or relief companies. Though there are several laws to prevent such practices but then there are several laws to prevent crime but still people commit it.

Ideally and according to the FTC rule and regulation all debt settlement companies must have a very clear and well defined service representation. Any false advertising and misrepresentation of facts is strictly prohibited by the FTC rule. The company must be very clear about their rate of success, true and meet it while including the promises made to you.

Know the worrisome practices

Even though the FTC rules are in effect, there are still a lot of reports of unfair practices that most debt settlement agencies follow. Several debtors end up complaining about such practices and of being duped by several debt settlement companies to different credit counseling agencies, nonprofit debt counselors and special advocacy groups.

• The FTC has been warned about these worrisome practices through which the debt settlement agencies are targeting unsuspecting prospective customers. They reach out to them through text message, Skype, internet chats, or even by setting up an in-person meeting with the consumers.
• It is a common belief amongst these unfair and unscrupulous debt settlement companies that such techniques are above and beyond the telemarketing regulations set by the FTC, the advocates said.
• It is also found that these debt-fixers often pose as attorney or law firms because the FTC rule has exempted lawyers from it. Therefore, these debt fixers are more of a debt buster and are always in the lookout for the loopholes in the FTC ruling though the FTC claims it is constantly monitoring closely for such companies that meets the exceptions.
• The FTC also states that simply hiring lawyers or calling the debt settlement company a law firm will not cut it. Meeting with the debtors and signing the papers at Starbucks will not help either until these settlement companies give an actual and in-person sales presentation.
• Taking advantage of the law these settlement companies are up to baiting prospective consumers with text messages. These companies also believe that they are eligible to charge fees from the consumers even if they simply make an initial call and they do not even provide any debt settlement feedback. However, these kinds of behaviors by the settlement companies are not typically exempted from the FTC rules.

What is required ideally is even if the debt settler posts an ad on TV or the radio or texts messages that may prompt a consumer to make the call to them, these companies must be prevented from charging advance fees, the advocates opined. Most importantly, these companies must not be allowed to present them as hiring attorneys or a legal firm to skirt the new rules of FTC.

Sometimes, the debt settlement companies may also shift their operations offshore simply to evade the FTC regulation. From these locations the debt settlement companies provide debt relief advice through their websites, publish slides from presentations of different services and much more. These companies are nothing more than an online gambling setup. They use Internet chat and Skype just as these gambling sites do to target consumers. It is the gaps in the FTC law that helps these companies to get around it. Therefore, it is required to know how it works and what the real legal exemptions are.

Disclosures and barred misrepresentations

As it is very clear that the upfront fees charged by the debt settlement companies typically to the tune of 15% or more of the total outstanding debt of a consumer is the primary and significant source of revenue.

The new FTC rules therefore emphasized in their Final Rule that all such service providers will require making several different disclosures while telemarketing debt settlement services to the consumers. According to FTC:

• The company must disclose all essential aspects of their services before signing up with the consumer for any debt relief service
• The time taken to provide results
• The cost
• The negative consequence and
• Information regarding the dedicated account.

In addition to the above requirement the Final Rule also prohibits these company form any misrepresentations about their debt relief service. In its Statement of Basis and Purpose that accompanies the Final Rule, it provides an all-encompassing guidance that the evidence providers must have while advertising any claims that are commonly used while selling debt relief services.

• There are regulations imposed regarding the Telemarketing Sales Rule and amendments were made in the rulemaking process as well in August 2009. The FTC published a notice in the Federal Register regarding the proposed amendments made in the rulemaking process. In it is mentioned that a request for public comments is necessary for making such changes in the TSR.
• There were over 300 commenters submitted their comments on it. These commentators comprised of a wide assortment of stakeholders. Apart from that the Federal Trade Commission also held a public forum on November 4, 2009 on the proposed amendments.
• During this the FTC developed the Final Rule on the basis of the public comments as well as the current testimony before the Congress. It also considered the record of the public forums along with the September 2008 Workshop of FTC on the debt settlement industry in addition with the actions of the law enforcement brought by the states and the Commission.

Knowing about these practices as well as the laws to control these will make you less worried and you will be able to get rid of your debts just the way you want.