An Attempt To Control Debt Settlement Scams By The FTC
Millions of people across the globe are juggling with multiple debts after the recent economic meltdown. The circumstances have played a key role to increase the prominence of the debt settlement companies. The number of people plunging deeper into debt is constantly on the rise and eventually they are left with no other options that knocking the door of a debt settlement company. Many scam companies are taking advantage of these vulnerable debtors. So, is it possible to rely on the debt relief firms presently? The FTC is receiving complaints regarding the fraud debt settlement companies. They are be-fooling the debt stricken people in the name of providing debt relief assistance to them. Therefore, Federal Trade Commission (FTC) has enforced new laws for safeguarding consumers from being affected by
debt settlement scam.
According to the new FTC law the debt settlement companies have been forbidden to collect upfront fees from the clients. A fee cannot be charged by the companies to their clients before the beginning of the settlement process. In many cases, the debt settlement companies fail to keep their promise that they make to their clients. Some companies disappear after collecting money from these susceptible consumers. Therefore, many people have been forced to file bankruptcy owing to debt relief scams. But this new law endeavors to stop various types of illegal practices.
The scam debt settlement companies will now find it difficult to thrive with the implementation of the new FTC law. This law states that the companies especially, the profit making organizations are not permitted to charge a fee till the companies manage to lower a fraction of the unsecured debt of the clients. A written agreement needs to be signed by the creditors and the consumers as per the FTC rule. Before the companies charge the clients, the individual needs to make payment according to the agreement.
Additionally, the law compelled the settlement companies to provide authentic information to their clients and restrain them from misrepresenting the facts. FTC has also established some Tele marketing guidelines that the companies needs to obey while dealing with the clients over phone. The clients have the right to acquire detail information regarding the settlement process and whether it will have a negative impact on their future or not. The companies are required to maintain a transparency about its dealings like the success rate of their settlement process and so on. This law is only applicable for pro-profit companies only.
FTC has penalized more than 250 companies who tried to exploit financially strapped people. As a result, we can expect that the new law will help the debtors to find a reliable debt settlement company that will guide them to reduce their debt woes.