During the recession of 2007 to 2009 many people were bombarded by debt relief companies ads through email, mail, and telemarketers
. These companies promised to help them bring their debt under control by lowering their monthly payments and interest rates. Grievances to the Federal Trade Commission about debt relief services rose 18 percent over one year from 2008 to 2009.
Some of these businesses actually did help consumers, but many were making promises they couldn't keep. According to a 229-page FTC document only 1.4 percent of one firm's customers received the agreed product of debt reduction of 39 percent of 72 percent. Some even ended up costing their customers even more money without settling their debt issues, because of their actions the Federal Trade Commission has issued new telemarketing regulations.
New Guidelines for Debt-Relief Businesses:
Starting Monday September 27th 2010; they have to tell you how much time it will take to receive results and how much it will cost before signing up new customers.
Beginning on Wednesday October 27th 2010; for profit companies doing business over the telephone can't collect fees from clients until their credit card or other unsecured debts are settled.
Hopefully these new rules will help prevent people from being taken advantage of by these companies. However there are a few possible loopholes; these rules only apply to advertisements, telemarketers, and if someone calls in regards to an ad. If a customer meets with a debt counselor face to face they don't have to follow these guidelines. Of course companies will always try to find a way to circumvent rules that prevent them from doing business.