Advance Fee Ban Will Reshape the Debt Relief Industry

CRN Supports Changes to the Telemarketing Rule Just Announced by the FTC

Yesterday, the FTC announced important changes to the Telemarketing Sales Rule, http://www.ftc.gov/opa/2010/07/tsr.shtm. The changes are intended to protect consumers with too much credit card debt from abusive debt settlement practices. One of the most important changes is that settlement firms will no longer be able to charge consumers up-front fees to settle their debts as of 10/27/10.

Overall, I am thrilled that the FTC is reigning in abusive debt settlement firms. For too long, these firms have been allowed to prey on consumers with too much credit card debt. Sadly, in far too many instances, consumers who worked with such firms saw their financial situations grow worse, not better, because of the large up-front fees they had to pay, and many of those consumers eventually ended up in bankruptcy.

The rules will shape the industry and promote the best practices moving forward.

I am concerned that some settlement firms may charge a large fee at the back end of their work for consumers. I have always contended that the fee amount charged by a debt settlement service provider directly correlates to how long it will take an individual to be successful in settling all of their debts. Program duration is directly attributable to increased risk of aggressive collection efforts such as filing lawsuits against a consumer in order to collect.

When consumers are looking into debt settlement as one of the few legitimate options available to deal with crushing debt, it is IMPERATIVE that they still weigh the COST for the service.

I will be posting more detailed comments about the amendments soon. Stay tuned!

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New Rules For Debt Settlement Services

The Debt Relief Industry will be forever changed by the announcement and publishing of new rules from the FTC today. The rules are designed to protect consumers from those marketing and providing debt settlement services.

The most contested  measure anticipated in the new rules is a ban on companies charging upfront fees. Upfront fees have been held up as necessary by the majority of debt settlement companies who have lobbied heavily to maintain the status quo. Consumer advocates and regulators have argued that upfront fees are the equivalent of an abusive business practice. We, at CRN and Debt Bytes, agree! Which is why CRN fees for full service debt settlement have always been based on SUCCESS, after the creditor is paid.

Stay tuned to Debt Bytes, as we will be covering the impacts of these changes in the coming weeks.

For Immediate Release

July 28, 2010
**MEDIA ADVISORY FOR TOMORROW**

FTC Chairman to Announce a New Debt Relief Rule to Protect Financially Distressed Consumers at Middle Class Task Force Event

WASHINGTON – Tomorrow, Thursday, July 29th, at 1:30 PM ET, Federal Trade Commission Chairman Jon Leibowitz will announce a new rule to protect consumers of debt relief services at a Middle Class Task Force event at the White House. Following the Chairman’s announcement, Vice President Biden will discuss the administration’s consumer protection agenda and the importance of consumer protection to middle-class families.

This event will be POOLED for TV cameras, and OPEN to print, online, radio and still photographers. An RSVP is required to participate.

WHAT: FTC Chairman to Announce a New Debt Relief Rule to Protect Financially Distressed Consumers at Middle Class Task Force Event

WHO: Vice President Joe Biden, Federal Trade Commission Chairman Jon Leibowitz

WHEN: Thursday, July 29, 2010, 1:30 PM ET

  • Gather time: 1:00 PM ET at the White House stakeout location
  • Camera pre-set: 12:30 PM ET

WHERE: Eisenhower Executive Office Building, Room 430

RSVP: Press who wish to cover this event should RSVP to press@ovp.eop.gov by tomorrow, Thursday, July 29, 2010 at 8:00 AM ET. **Press who DO NOT have a White House hard pass should include their Date of Birth and Social Security Number. All press must enter the White House at the Northwest Gate.**

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Consumer Rights and Debt Collectors

You have the right to life, liberty and the pursuit of happiness.

When struggling to manage your debt, however, it often seems as though those rights have been suspended!

The struggle to pay bills can make you feel as though you don’t have a life. If it seems as though all you are doing is working to pay the bills and getting nowhere, you could feel imprisoned. If you are buried under a mountain of debt, a sense of gloom will sometimes permeate your thoughts. That sense of gloom can turn into DOOM if you have fallen behind in payments.

Enter the Debt Collector

{cue scary suspense theme music here}

Dealing with tough financial times is hard enough as it is. When debt collectors start ringing your phone at 8 am and do not stop until 9 pm, your phone begins to resemble something with scales and sharp teeth!

When you pick up the phone and speak to whoever is on the other end, you will experience different types of collection efforts. People in the collection business often develop either a good cop or a bad cop persona.

Speaking to and repeating your current financial hardship to a good cop collector can be tedious, but otherwise not unpleasant. Speaking to a bad cop collector can be about as pleasant as running your nails over a chalk board repeatedly.

We’ve Got You Covered

We will continue to develop our coverage of this topic and add resources for dealing effectively with collection abuse. Debt Bytes will publish a resource guide for victims of abusive and illegal collection tactics that will be linked to this post and all future posts on this topic. Here at Debt Bytes, we will cover debt collection extensively:

  • You need to know how to be a winner in the collection game.
  • You need to know you have rights that protect you from abusive and illegal collection practices.
  • You need to know there are solid resources available to you for legal assistance if a collector violates the Fair Debt Collection Practices Act (pdf doc).

Debt Collection Questions?

For now, you can:

  1. Post your question right here in the comment section below.
  2. Start a new post with your question at Ask CRN.
  3. Fill out our consultation request form to schedule a time to speak with an experienced CRN Debt Specialist.
  4. Or call 800-939-8657 and press ext. 3 to schedule a consult.

CRN specialists have many years of experience assisting people with putting an end to their struggles with debt. Contact us to find out if we can help you.

Debt Happens. Freedom from debt happens too!

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Call (877) 721-9723 for help today!