New restrictions protect those with credit debt
The explosion of credit use in recent years has left many debt-riddled consumers to turn to relief agencies for assistance.
A recent report by the Federal Trade Commission has created new regulations for the industry, which aim to provide better transparency between the relief provider and the consumer.
Evan Zullow, an attorney with the FTC, tells Fox Business that under the new regulations, “Debt relief companies are going to act as a liaison between the consumer and the credit card company to negotiate either a reduction or a settlement.”
The latest restrictions apply to all for-profit debt relief organizations, including for-profit counseling, debt settlement companies and debt negotiation firms, according to Fox.
Also, as of Oct. 27, debt-relief companies will be unable to collect upfront fees for services. Under the provision, the company must settle at least one payment for a client before any fees are paid, the news provider reports.
The FTC adds the new regulations do not put restrictions on the cost of the services. Officials advises consumers who want to to verify the legitimacy of a debt relief agency to contact the Office of Consumer Affairs.