Why FTC Banned Upfront Payment for Debt Relief

Why FTC Banned Upfront Payment for Debt Relief

Debt relief services can't ask for an upfront payment anymore. On July 2010 the Federal Trade Commission banned upfront payments for debt settlement companies. The Federal Trade Commission started its operations in 1914 and the main reason for it foundation was to protect consumers from harmful and illegal commercial procedures. Consumer protection is one of the main functions of this commission. The increasing number of complaints about impossible to achieve claims of debt relief companies made it inevitable for FTC to take some precautions. The most efficient precaution was to ban upfront payments for debt relief.After the introduction of credit cards and debit cards, their use started to become widespread and they started to become a real problem. The limits were generally evaluated wrong and people were given more credit than they could afford. In a short time problems started to increase and in the 21st century there are millions of people who are considering bankruptcy as a solution to their economic problems. Of course this presents an opportunity for people who love to use the freedom of the open market economy. There are lots of marketing methods developed throughout years. Most of these marketing methods depend on the success of the first interview. When we talk about first interview in a matter concerning debt release, it means signing up with a service. Most of the marketers in this in this sector work for commissions. Therefore what is important for them is only and only to make sales. Some of these marketers use unethical methods like lying to their potential customers.Some of them claim they could give up to 80% reduction in the monthly payments. This is of course not a logical thing. However people want to believe good news. The signup fee for services like this was between 500 and 1000 dollars. We can consider this sum to be the last part of savings of the person in question. They say if something is too god to be true, it probably is not. Nobody records the phone calls they receive. So when people don't get what they are promised, they don't have a proof of the promises.To stop these sales methods and broken promises, and to solve this problem from its root, the Federal Trade Commission banned upfront payment for services about debt relief. Now the marketing people can't get commissions form every person they convince to sign up. Now for a debt relief services to be able to earn money, they must present real solutions to debt problems. Payment can be made only under certain circumstances. If the debt relief service is successful in its settlements, then they get paid by their customers. Some of the companies giving this service supported this ban because they were already not taking signup fees. After the ban, these companies were the ones that kept giving their services with success because they were already prepared and experienced in their area. Now, people should check the past of the debt relief service they plan to work with. The question is, did they ask for upfront payments before the ban.

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