Even with strict new American debt negotiation laws in place, apparently some companies and individuals providing debt relief services are still going out of their way to try and secure upfront fees from their customers. (This is according to a concerned group of credit counseling companies who have complained to the FTC). In Part 1 of this article we looked at their claim that some debt settlement firms are "fronting" themselves as law firms so that they can charge upfront retainer fees. Next we'll look at some other supposed "tricks" and finally, show you how to protect yourself and your money.
Text Messaging: Apparently some companies are sending text messages to consumers that appear to be from a survey company, asking about their debts. If they have more than a certain amount of unsecured debt, they are put in touch with a debt settlement company posing as an "debt advocate". The consumer is then sold a plan involving some complex legal tactics and charged a hefty up-front fee. My opinion? This appears to be a completely illegal scam, not a mere "skirting" of the new American debt negotiation laws. How to protect yourself? Never, ever pay up front fees for any debt relief program.
Using Internet Chat To Sign People Up To Debt Settlement Programs: In my opinion, (and I am not a lawyer), this tactic appears to be on-side when it comes to the FTC's debt negotiation laws and therefore legal, as long as there is no interstate telephone contact made between the two parties. Having said that, I'm not sure what the credit counseling services' beef is. Bottom line for you? Don't pay upfront fees. (Am I sounding like a broken record yet? Good!)
Off-Shore Call Centers: American debt negotiation companies that employ this tactic are obviously trying to get out of obeying the U.S.A. based laws by claiming they are not operating within the U.S.A. I'm not even going to attempt to go into how this may or may not be legal. I will say that if it is legal right now, it likely won't be soon. Bottom line for you? Don't pay upfront fees.
Selling Debt Settlement Products (kits, software,books, etc.) At Inflated Prices: On the surface I'm not sure how this is evading the new debt settlement laws if all the company is doing is selling the product. However, if a company was offering debt negotiation services and requiring that consumers buy these types of products at overly inflated prices as a condition of entering the program then yes, this would be illegal. (It is just a way of getting an up-front fee by disguising it as a product purchase.) Bottom line for you? Well, this one is a little trickier because the company is disguising the up-front fee. But if you just remember to never pay any money up front for a deb negotiation service (regardless of how it is disguised) you should be protected.
You got it.. if you never pay up front fees for debt settlement services, or saying it another way, if you only pay for debt settlement services after they are completed and you have actually paid your creditors off, then you will be protected. You as a consumer should not worry yourself about which companies and/or individuals are required by law to obey the new FTC Final Rule American debt negotiation laws. Instead, only deal with debt negotiators that abide by the law, and if they don't, simply move on to one that does.