subject: Kicking Debt-relief And Debt Repair Scammers To The Curb [print this page] Who will have ever guessed that the horrible practices of scam artists is about to be curbed?
Yes since the economic spiral has taken place since 2007, many people have fallen into serious debt and had to seek some sort of debt-relief. It's not a pleasant place to be because with much debt relief, there have been a terrible amount of scamming and basically complete raping of people's hard earned money.
Many of these so called debt relief programs and companies have been literally stealing people's money with the empty promises of helping folks out of their debt, or to repair their credit. Once people get that point in seeking out a debt relief program they are up against the wall and really at the mercy of these companies who will give them more problems than they wanted.
We are not knocking the businesses that are legitimate, but rather target those companies who have proven to be unscrupulous and ought to be sent away in prison. It's a brutal comparison, but businesses as these should be compared to the olden days of the mafia, where one borrows an amount of money and expected to repay it back with a ridiculous interest rate. But instead of physically hurting that person or their family, these companies can go as far as garnishing wages
Here's the rundown of what debt relief or debt settlement companies promises a person: the promise to renegotiate or in some way change what you owe to an unsecured creditor or debt collector. Sham debt-settlement companies to make false claims that much of your debt can be easily wiped away.
As the economy took a nose dive, many people fell behind on their consumer loans and as a consequence were drawn in desperation to companies that claimed they could, in some cases, cut debts in half. The promised assistance might have included finding ways to reduce a debt balance, an interest rate or even penalty fees. The final lure was the promise to help their prospective client's credit score in an outlandish short period of time.
U.S Law enforcement officials have increasingly been receiving complaints about companies that collected fees but did little, if anything, to settle people's debts. Since the economic fall of 2007, The Better Business Bureau reported that they have received thousands of consumer complaints from all 50 states about debt-settlement companies that have driven people deeper into the hole, in some cases causing them to be sued by creditors or even to have wages garnished.
Something had to be done about this because misfortunate hard working people should not be stripped further of their dignity and be thrown into a tank of hungry sharks.
As of October 27th 2010, new rules being implemented by the Federal Trade Commission require debt-relief companies to make precise disclosures to potential customers, such as how long it will take to get real results. Other things addressed will be how much the service will cost and the potential negative consequences that could result from seeking debt relief. The firms are also forbidden from misrepresenting what they can do for debtors, in specific, the actual percentage of debt that is normally erased when folks use their service.
For example, the debt relief company must show in writing how well it has done for customers, and has to include those customers who fell out or otherwise failed to complete the program.
Now the art of debt relief scamming doesn't stop at newspapers, radio, television or even the Internet, but over the telephone. People may have received calls for scam artists that promise to help out a person with a bad debt. With the new rules, this includes and amends the Telemarketing Sales that includes anything to do with services in helping people out of debt, including those offering debt settlement and debt negotiation services or credit counseling.
It's important to reminder that the rules cover telephone calls made to likely customers and calls made by debtors in response to advertisements and other solicitations, including people working on behalf of a debt-relief firm.
The only exception to this is the legitimate nonprofit organizations that truly help people renegotiate their debts. These legitimate companies all fall under and have been approved by the Better Business Bureau. However, companies that wrongly declare themselves as a nonprofit status are subject to the FTC principles.
As of Oct. 27, a new phase will start in its efforts to curb scam artists that claim to be offer debt relief.
In the phase it will be illegal for a debt-relief service to charge upfront fees. Companies that sell their services over the telephone won't be able to get paid until they successfully settle or reduce a customer's credit card or other unsecured debt.
Everybody should take note that even as sweet as it sounds, once the artful scammer tells you that a fee must be paid up front, then hang up the phone as soon as possible and report this company.
It should be noted though, that people should take in as much information about the scamming company, such as their telephone number and address if possible, so that the authorities can track these criminals and take appropriate action.
There are also requirements on how money set aside for a settlement offer is to be dealt with. Tricky, yet clever scam artists will tell its customers to stop paying their bills and instead send money to the debt-settlement firm with the intent of offering creditors a lump-sum offer for less than what's owed.
Under the new rules, a dedicated account has to be made at an insured financial institution, such as a bank and that the money belongs to the client, who can withdraw it anytime without paying a penalty.
Like any new rules, there are bound to be loopholes, but it's a great start. The U.S Congress will need to close some loopholes.
One major loophole is that the rules don't bound the amount of fees companies can charge. There's just too much room to scrape people's money. This is one area that will be studied and changed in the near future. One idea that is being sorted out is putting a cap on the amount of fees that debt relief companies can charge to their clients.
Further, the rules need to expand beyond debt-relief services offered by telephone. Salespeople that canvass a debt relief service who meets face to face with people before signing them up so far exempted from most of the new provisions.
With these newer rules on the artful scammers, should curb their practices, but will never completely eliminate it. The biggest reason why so, is that there are far too many desperate people who are willing to do just about anything to get themselves out of debt without doing their investigation.
It is sufficient to conclude that if you're in serious debt, educate yourself about your new protections. If you need to go down the road of debt settlement or debt relief, please make sure that the company you will choose is legitimate; like companies that have the Better Business Bureau Seal. Otherwise, you'll just make a bad situation worse. And don't believe in easy fixes because my dear reader, there aren't any.
